PBOC may add liquidity, cut RRRs – China Press

Dhwani Mehta FXStreet

“The People's Bank of China may further boost liquidity including cutting banks' required reserve ratios to meet significant upcoming maturing MLFs and various demands of the economy, including the sales of local government special bonds,” the Securities Times reported, citing analysts.

Additional takeaways

“On Tuesday, the central bank conducted the fourth daily reverse repo purchase valued at CNY50 billion, a larger sum and a signal that it wants to stabilize the market's expectations.”

“Liquidity showed marginal tightness at the end of August with DR007 rising to 2.2% from 2.0%, due to the maturing MLFs and due tax payments, the newspaper said. The central bank's large injections have kept market rates stable.”

Market reaction

AUD/USD is back on the bids around 0.7320 amid upbeat Australian Q2 growth numbers, as investors ignore downbeat China’s Caixin Manufacturing PMI. The spot is up 0.07% on the day.

Meanwhile, USD/CNY was last seen changing hands at 6.4623, modestly flat on the day.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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