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The People's Bank Of China Decided To Lower The Deposit Reserve Ratio Of Financial Institutions By 0.5%


The People’s Bank of China announced that it will lower the deposit reserve ratio of financial institutions by 0.5 percentage points from December 15, 2021. The market estimates that the overall RRR cut can inject approximately RMB 1.2 trillion into the market, which is expected to help support the development of the real economy and Facilitate a steady but slow decline in comprehensive financing costs. As for the renminbi exchange rate, there is no pressure due to the unexpected RRR cut by the People's Bank of China, mainly because the market hopes that this move may help alleviate the headwinds brought by the Fed's accelerated tightening to the global economy. In addition, mainland exporters need more local currencies to make various payments at the end of the year, which will help offset the pressure on the renminbi brought by the RRR cut.
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