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China’s stock markets fell on the first day back from the lunar new year holiday [Xinhua]
In a move that surprised many analysts, the PBOC raised the interest rate on open market operation reverse repurchase agreements (repos) by 10 basis points.
It also raised the interest rates on short-term and medium-term loans.
The PBOC also injected nearly $93 billion to increase liquidity in the banks.
The central bank’s move coupled with a weakening of the US dollar this week helped the yuan gain ground on the first day back from the week-long lunar new year holiday.
On Friday, the dollar closed at 6.87 yuan, a 0.20 per cent loss.
The dip in the US dollar and the PBOC’s intervention came as the Foreign Ministry in Beijing refuted Trump’s statement that China (and Japan) was devaluing its currency to gain unfair export advantage.
Ministry spokesman Lu Kang said that China would not resort to a currency war to seek advantage or raise competitiveness in trade.
“We have no intention of fighting a currency war. From a long-term perspective this is not beneficial to China,” he said.
“We have no intention of fighting a currency war. From a long-term perspective this is not beneficial to China,” he told journalists.
Meanwhile, China’s markets traded thinly on the first day back from the holiday and shares fell.
The benchmark Shanghai Composite index closed down 0.6 per cent.
The BRICS Post with inputs from Agencies
