FXStreet (Delhi) – Prashant Newnaha, Rates Strategist at TD Securities, suggests that Chinese interest rate cut should help to help ease fears of outflows, while providing further support to have the Yuan included in the SDR.
Key Quotes
“Officials cut benchmark 12m deposit and lending rates 25bps (deposit rate now 1.5%, lending rate 4.35%), cut the RRR by 50bps (17.5%) and removed the deposit rate ceiling after the Asian close on Friday.”
“Recent data has shown that cuts in borrowing rates have had a stimulatory impact, so the announced cuts on Friday should continue to provide underlying support to the economy. The biggest surprise was the removal of the ceiling on bank deposit rates, achieving interest rate liberalisation faster than expected.”
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