Published at 02:45 (GMT) 29 Jun
EMGA CNY FX FLOWS: USD/CNY 1Y NDF lifted towards 6.2500, SSEC pares earlier gains; PBoC cuts interest rates
WSJ: After more than a week of a brutal selloff in Chinese stocks, the country's central bank on Saturday took a rare easing step, cutting both its benchmark interest rates and the amount of reserves certain banks are required to hold. In a statement, the People's Bank of China said both steps were aimed at lowering borrowing costs and "stabilizing growth" in the world's second-largest economy. The PBOC cut its one-year benchmark lending rate by a quarter of a percentage point to 4.85% and its one-year deposit rate by the same scale to 2%. At the same time, it also lowered the reserve requirement by half a percentage point for banks with sizable lending to farmers and small businesses. The central bank has rarely cut both interest rates and the reserve-requirement ratio on the same day. The last time it did so was in October 2008, the height of the global financial crisis. The actions came a day after Chinese stocks saw their biggest one-day decline in several years. On Friday, the Shanghai Composite Index fell 7.4% and was off 19% since hitting a 52-week high on June 12, a decline that has wiped away $1.25 trillion in market capitalization, an amount roughly equal to the size of Mexico's economy.
Over in financial markets, SSEC rallied 2.40% to open at 4289.771 vs, last close at 4273.457. However, upside may be limited given that Greece concerns are weighing on the market sentiment. At last look, SSEC pared gains and was seen up only 0.9%. PBOC fixed mid-point higher at 6.1168 vs. 6.1137 on last Friday. USD/CNY 1Y NDF prices were lifted towards 6.2500 lvls at last check, while spot is trading range bound between 6.2085 - 6.2100. For 1Y NDF wider range of 6.2300 - 6.2600 still defining price action and a break of this range will trigger stronger directional moves. BB
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