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In view of Greg Gibbs, Analyst at Amplifying Global FX Capital, the cut in the Reserve Requirement Ratio (RRR) for Banks by the Chinese government was probably designed to cool fears over weaker growth and deleveraging, and shore up the flagging Chinese equity market.

Key Quotes

“However, the Chinese equity market fell sharply on Monday to revisit its lows last week and the Chinese currency depreciated by one of its largest one-day margins (over 0.5%), extending its relatively sharp slide over the last two weeks.”

“The falls in Chinese assets spread across EM Asia, extending the regions relative weak currency and equity performance in recent weeks.”