The news of the People's Bank of China RRR cut hit during the London morning on Friday
- PBOC has cut RRR at 5 big banks to ease seasonal liquidity pressure
Along with
- PBOC to provide 28-day liquidity for several major commercial banks
More here via Reuters following the headlines:
- People's Bank of China (PBOC) has cut the reserve requirement ratio (RRR) ... taking the ratio down to 16%
- It's the first reduction in RRR in nearly a year
(last was in February 2016)
- "Today's move seems to suggest that liquidity conditions are tighter than authorities' expectations, as capital outflows remain strong," said Zhou Hau, senior emerging markets economist at Commerzbank in Singapore."But in the meantime, an outright easing will add pressure on the yuan exchange rate as well. That could be the reason behind today's strange move."
(ps. it's a strange move when analysts fail to predict it)
"This is a temporary adjustment, and is mainly in response to the cash withdrawal, tax payment and reserve payment. (The RRR) will go back to the normal rate after the Lunar New Year holiday" one source said
The move was in addition to the temporary liquidity support for several major commercial banks for 28 days
