The Central Bank of China is increasing foreign exchange intervention to maintain liquidity in the market
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Chinese today Central Bank lowered interest rates on 14-day reverse repo transactions and increased foreign exchange interventions in the domestic market. notedthat this was done to “maintain a stable level of liquidity in anticipation of the end of the quarter”, when companies have increased demand for currency.
Rates on 14-day reverse repos have been reduced from 2.25% to 2.15%. FX interventions of 2 billion yuan ($286 million) per day, which began in July, have now risen by another 2 billion yuan per day through 7-day reverse repos and by 10 billion yuan per day ($1.4 billion) through 14-day reverse repos .
Analysts considerthat rate cuts and new foreign exchange interventions have led to the yuan depreciating against the dollar today by 0.13% – to 6.99 per $ 1 – falling below the psychological level of 7 yuan per $ 1.
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