PBOC cuts RRR by 25 bps, effective from Dec 5

Dhwani Mehta FXStreet

The People’s Bank of China (PBOC) cuts banks’ Reserve Requirement Ratio (RRR) by 25 basis points (bps)

The Chinese central bank said the bank’s Reserve Requirement Ratio cut effective as of December 5.

Additional takeaways

Weighted average RRR for financial institutions at 7.8% after the new cut.

New RRR cut will release around 500 bln yuan in long-term liquidity.

Will step up implementation of prudent monetary policy.

Will keep liquidity reasonably ample.

Will not resort to flood-like stimulus.

Market reaction

AUD/USD is unable to capitalize on the PBOC RRR cut, as it feels the pull of gravity on the back of a sudden strength in the US Dollar. The Aussie is losing 0.33% on the day to trade at 0.6732, as of writing.

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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