The Chinese currency is slackening against the US dollar on the possible further development of the trade conflict between the countries. At the same time, PBOC has released plans to inject almost $108 billion liquidity to the market as a way to boost the economy.
On Sunday, the Central Bank of China announced the decline in mandatory reserves for a number of banks by 0.5% by July 5. For reference, large banks have to keep 16% of their capital in reserve, with 14% set for smaller institutions. The rate of mandatory reserves is used by PBOC as a means for liquidity management.
In fact, insiders expected such revision, though not at the announced size. The decline will generate up to CNY 700 billion that banks will be able to use for loans. The Bank has reported a high level of liquidity in the market for now.
The yuan is weaker vs the greenback at the Asian session. The US dollar-to-yuan exchange rate was recorded at 6.5350.
At the same time, the Japanese yen posted gains vs the American currency reaching some 109.50.
Meanwhile, the Australian dollar managed to somewhat recover vs its American counterpart on oil price hikes and some decline of the greenback. The US dollar-to-Australian dollar rate was seent at 1.3455.