September 24, 2024 at 04:51AM
Both the Shanghai Composite and CSI 300 indices are up 2.4% on the day while the Hang Seng is up by 3.3% ahead of the lunch break later. That comes as the PBOC unveiled more easing measures earlier, after not doing so at the end of last week. However, the key caveat here is that they did not specify when these changes will go into effect.
The central bank said that the RRR will be cut by 50 bps and that the 7-day repo rate will be cut further to 1.50%, down from 1.70%. They also said that other interest rates will fall as well, with rates on existing mortgages to be reduced by 0.50% on average.
But again, no exact timeline was given for these changes.
Nonetheless, Chinese investors are taking it as a positive sign or at least a vote of faith for now. Domestic markets are being boosted and that is seeing the yuan gain further as well. USD/CNY is now down to 7.04, its lowest since May 2023.
The dollar’s softer standing over the last month is also contributing to the fall in the pair. But the PBOC sure isn’t drawing any lines on that, at least for the time being.
Looking out to broader market sentiment, this just acts as a further headwind for the dollar in the bigger picture of things.
This article was written by Justin Low at www.forexlive.com.
