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PBoC Delivers RRR Cut, USD A Touch Softer, Equities Bid

CROSS ASSET

The PBoC has deployed a 50bp RRR cut, effective 5 February, which will release CNY1tn of liquidity into the Chinese economy (as well as a 25bp cut to relending and rediscount raters for the rural sector and small firms, effective 25 Jan). Rhetoric also pointed lower LPRs moving forwards.

  • A potential pre-LNY RRR cut was widely touted, although today’s announcement probably comes ahead of schedule vs. most expectations. Global equity index futures and the Hang Seng are bid on the news, while the broader USD ticks lower vs. feedthrough into expectations surrounding the rest of the world (excluding-U.S.) growth channel. USD/CNH saw a very limited uptick, but that move has faded.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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