China's central bank cuts reserve ratio for some lenders


Beijing has intensified cash flow across the financial system this year since policymakers are concerned on soothing capital outflow fears and strive for soothing pommeled markets amid the growing anxieties regarding frenzied trade war with the us could have a damaging effect on the broader economy.

Spot yuan was on track for its lowest close in seven weeks against the U.S. dollar, as expectations of more easing measures by China, plus surging USA bond yields, put pressure on the Chinese currency. The move hopes to reduce financing costs and spur growth amid growing concerns over a potential economic slowdown resulting from the trade war between the US and China.

Brazil's real currency hit a two-month high and stocks jumped after market-preferred presidential candidate Jair Bolsonaro's strong first-round win on Sunday boosted investor confidence.

At 0540 GMT, China's blue-chip CSI300 index was 3.5 percent lower while the main Shanghai Composite Index was down 2.9 percent. The blue-chip CSI300 index, which also fell briefly into negative territory, was up 0.3 per cent.

The Chinese central bank announced that it would reduce the reserve requirement ratio by one percentage point for the fourth time this year, in hopes of freeing up a total incremental fund of 750 billion yuan (US$50.989 billion), The Paper reported.

China has slashed reserve requirements for the country's banks, freeing up an estimated $109 billion of extra cash for infrastructure and investment, in a bid to bolster its vulnerable economy. "And today's fall is not surprising after weak performance in external markets during the holiday".

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Pence's speech marked a sharper United States approach towards China, going beyond the bitter trade war between the world's two biggest economies, which has magnified concern about the outlook for China's economy. On Friday, Chinese technology stocks listed in Hong Kong, including Lenovo and ZTE, slumped on a media report that the systems of multiple United States companies had been compromised by malicious computer chips inserted by Chinese spies.

Foreigners dumped 9.7 billion yuan (S$1.94 billion) of A shares through exchange links with Hong Kong on Monday, just short of a record hit eight months ago, as mainland markets reopened after a week-long break. Shenzhen-listed shares of ZTE Corp tumbled more than 8 per cent at market open, before paring losses.

But the major indexes' gains paled in comparison to Monday's rout, which saw the CSI300 plunge 4.3 per cent, its biggest loss since February 2016.

The PBOC will "maintain reasonably ample liquidity to drive the reasonable growth of monetary credit and social financing scale", it said. "Liquidity is not the issue". Richard Jerram, chief economist at Bank of Singapore, said while the Fed would not be panicked by the increase in wages "evidence that tight capacity conditions-such as a low unemployment rate-are pushing prices higher will keep them on the current tightening path". "The narrowing interest rate differentials between China and the U.S. will exert more downward pressure on the RMB", wrote Nathan Chow, strategist at DBS Group Research.

Following the PBOC's move, the offshore yuan was 0.2 percent weaker against the dollar in early trade on Monday. The global dollar index rose to 94.143 from the previous close of 94.133. That was the biggest drop in nearly a month and led to the redback's lowest dollar value since May past year.