Created
: 2024.09.27
- English
- English
- What's Myforex
- Share
- Use tools
- Get information
- What's New
- Help center
- About us
- Customer support
- Terms and policies
-
-
PortfolioShare your portfolio and performance in real time -
Events & contestsEvents and contests held by retail brokers around the world
-
-
Real-time spread comparisonCompare spreads of major retail brokers in real time -
Volatility analysisVisualize volatility as a measure of daily market activity -
Swap point comparisonCompare buy and sell swap values for each broker by symbol -
Market rates & chartsCheck prices for all instruments offered by each broker -
IndicatorsProviding in-house developed indicators for MT4/MT5 -
Trading calculatorsCalculation tools for each broker to help you trade
-
-
World FX newsLatest news on forex and cryptocurrencies from around the world -
Broker informationTrading information of retail brokers worldwide -
MetaTrader4/5 user guideUser guide collection for the latest MetaTrader4/5 -
Economic calendarRelease calendar for indicators from official sources of major economies
PBOC: Decision to lower RRR is equivalent to providing long-term low-cost funds for banks
World FX news
Breaking news
PBOC: Decision to lower RRR is equivalent to providing long-term low-cost funds for banks
New
2024.09.27 16:48
2024.09.27 16:48
2024.09.27 16:48
The People's Bank of China (PBOC) said in a statement on Friday, " the decision to lower RRR is equivalent to providing long-term low-cost funds for banks."
Additional takeaways
The impact of the recently announced incremental interest rate policy on banks' net interest margins remains neutral overall.
Lowering of the interest rate of the stock of mortgage loans will reduce the interest income of banks, but will also reduce the early repayment of customers.
Lowering 7-day reverse repo rate is expected to asymmetrically reduce loan prime rate and deposit rates.
Banks' net interest margins will remain largely stable.
PBOC's decision to lower RRR is equivalent to provide long-term low-cost funds for banks.
Medium-term lending facility and open market operation will be the main method for the PBOC to provide short- and medium-term funds to commercial banks.
Market reaction
AUD/USD is recovering some ground on these headlines, currently trading at 0.6885, still down 0.14% on the day.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment - whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) - is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia's largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia's largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Last updated
: 2024.09.27
Related articles
GBP: Strength continues - ING
11 minutes agoUSD/CAD Price Forecast: Trades cautiously ahead of US PCE inflation, Canadian GDP
16 minutes agoUS Dollar consolidates ahead of US PCE release
21 minutes agoUSD/JPY: USD has to maintain a foothold above 145.50 to grow - UOB Group
36 minutes agoCrude Oil set for weekly loss on waning worries about supply
51 minutes agoUSD: Markets are less sensitive to inflation news - ING
51 minutes ago
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
Was this article helpful?
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Thank you for your feedback.
Thank you for your feedback.
Most viewed
GBP: Strength continues - ING
It's been a quiet week in the UK calendar, but the weak economic indicators out of the eurozone have dealt a blow to EUR/GBP, ING's FX strategist Francesco Pesole notes.
New
2024.09.27 20:10USD/CAD Price Forecast: Trades cautiously ahead of US PCE inflation, Canadian GDP
The USD/CAD pair trades with caution below the psychological resistance of 1.3500 in Friday's European session.
New
2024.09.27 20:04US Dollar consolidates ahead of US PCE release
The US Dollar (USD) trades flat to marginally higher on Friday, with traders looking forward to the release of the Personal Consumption Expenditures (PCE) Price Index for August.
New
2024.09.27 20:00USD/CNH: To trade in a range between 6.9700 and 7.0100 - UOB Group
The US Dollar (USD) is likely to trade in a range between 6.9700 and 7.0100.
New
2024.09.27 19:59USD/JPY: USD has to maintain a foothold above 145.50 to grow - UOB Group
The US Dollar (USD) could rise 145.50; a sustained advance above this major resistance level is unlikely.
New
2024.09.27 19:45Gold retreats as global factors ease, Fed to be more measured
Gold (XAU/USD) edges lower to trade in the $2.660s per troy ounce on Friday, as the impact of Chinese government stimulus starts to ebb and central banks globally adopt a less dovish stance.
New
2024.09.27 19:36USD: Markets are less sensitive to inflation news - ING
US initial jobless claims came in once again lower than expected on Thursday, but continuing claims rebounded to 1.834m.
New
2024.09.27 19:30Crude Oil set for weekly loss on waning worries about supply
Crude Oil is bouncing off a substantial support level on Friday, consolidating the recent losses the commodity had to digest earlier in the week. Still, Oil is set to close the week in the red, weighed by news that Saudi Arabia - the world's largest crude
New
2024.09.27 19:30EUR: Another break above 1.12 is possible - ING
Eurozone-wide CPI figures will be published next Tuesday, and another break above 1.12 for EUR/USD is surely possible into next week's US payrolls data, FX strategist Francesco Pesole notes.
New
2024.09.27 19:24NZD/USD: Unlikely to break above 0.6355 - UOB Group
The New Zealand Dollar (NZD) could continue to rise but is unlikely to break above 0.6355.
New
2024.09.27 19:15Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy
