China Cuts Rates

by Marilou Long on August 25, 2015

in currencies,Foreign Markets

After the extreme volatility yesterday, the market is rebounding on news that China cut interest rates and lowered the required reserve ratio. As you recall, this current downturn in the market was triggered by the devaluation of Abilify the yuan several weeks ago. From the linked Bloomberg article: China fell back on its major levers to stem the biggest stock market rout since 1996 and a deepening slowdown, cutting interest rates for generic viagra online the fifth time since November and lowering the amount of cash banks must set aside. The one-year lending rate will drop by 25 basis points to 4.6 percent effective Wednesday, the Beijing-based People’s Bank of China said on its website Tuesday, while viagra the one-year deposit rate will fall a quarter of a percentage point to 1.75 percent. The required reserve ratio will be lowered by 50 basis points for all banks to cover funding gaps, it said. China’s surprise yuan devaluation on Aug. 11 led to a tightening in liquidity as the PBOC subsequently bought its currency to stabilize the exchange rate and curb capital outflows. The yuan may face more downside pressure as a result of generic nexium the latest monetary easing, making it harder to keep depreciation in check. A 22 percent stock market plunge over four days added pressure for broad stimulus as authorities pull back from other direct efforts to boost equities.

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