The Chinese yuan strengthened against the dollar on Wednesday after the central bank said it would not go for flood-like stimulus. The country’s blue-chip shares plunged. USDCNY is down -0.15%, CSI 300 is down -0.41%.
- The People’s Bank of China said it will maintain a prudent monetary policy and sees no shortage of base money.
- Following the central bank’s comments, analysts have lowered the expected RRR cut to 50% from the initial 70% from September to October.
- The comments by PBOC comes after the central bank said on September 1 it will raise the annual re-lending quotas by 300 billion yuan or $46 billion to boost small businesses.
- The monetary stance by PBOC comes amid a slow growth forecast by economists in the coming months.
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