The People’s Bank of China plans to enhance forex market resilience by adjusting reserve requirement ratios and interest rates. The bank acknowledges the stability of the economy but cites ongoing challenges. It commits to maintaining liquidity and managing forex stability, while also exploring new monetary tools to support economic growth.

The People’s Bank of China (PBOC) has announced plans to enhance the resilience of the foreign exchange (forex) market by reducing banks’ reserve requirement ratio and interest rates at an appropriate time. This decision arose during a quarterly meeting of the monetary policy committee, which emphasized the need for monetary policy to be more proactive, targeted, and effective.

After witnessing modest economic growth in the early months of the year, supported by governmental policies, the remarks echoed PBOC Governor Pan Gongsheng’s earlier comments, acknowledging potential challenges arising from U.S. tariff hikes.

The PBOC noted that while China’s economy remains generally stable, it faces persistent issues, including inadequate domestic demand and numerous hidden risks. The bank committed to maintaining sufficient liquidity and reducing social financing costs as a means of economic support.

Furthermore, the PBOC expressed a firm stance against disruptive behaviors in the forex market, pledging to manage risks associated with currency fluctuations and ensure the yuan remains reasonably stable. Additionally, new structural monetary policy tools will be explored to bolster investment in technological innovation, stimulate consumption, and stabilize foreign trade.

In March, China maintained steady benchmark lending rates for the fifth consecutive month, aligning with market expectations. Analysts suggest that while the pressures to stabilize the yuan have somewhat diminished, the anticipated easing of monetary policy remains a focal point for the near future.

In conclusion, the People’s Bank of China is actively taking measures to bolster the forex market’s resilience by adjusting its monetary policies. The bank acknowledges the current stability of the economy but recognizes ongoing challenges. By maintaining liquidity, stabilizing the yuan, and exploring new policy tools, the PBOC aims to support overall economic growth and address potential risks.

Original Source: www.tradingview.com

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