The People’s Bank of China is making an attempt to support the country’s economy that is suffering turbulence. A $20 billion injection in the country’s financial system was one of the central bank’s measures aimed at the economic stability. The yuan’s official exchange rate was weakened only by 0.3% against the US dollar. However, such a decision has significantly improved the health of the Chinese economy.
The measures were taken amid remarkable jumps of the yuan. The situation was close to critical and required an immediate intervention of the government. Thus, the regulator offered the funds in the form of seven-day reverse repos at an interest rate of 2.25%.
At the beginning of the year, China’s stock market crash and unexpected devaluation of the yuan jolted global markets and caused deep concerns over the state of the world’s second largest economy.
Besides, most experts underestimated China’s ability to overcome prolonged recession and perform radical restructuring. At the same time, the country’s officials said that markets have overreacted, and there are no reasons for further weakening of the yuan. At present, the regulator is correcting its mistakes. Nevertheless, global markets and China’s largest trading partners are still worrying about the country’s monetary policy.
