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China bond futures rise sharply


China's central bank is poised to move to make it harder to bet against the currency.
The People's Bank of China said will lift FX reserve ratio requirements for financial institutions on Wednesday to try to slow depreciation of the yuan. Photo: Reuters.

(ATF) – The Chinese government bond futures market closed sharply higher on March 4 after the US Fed announced an interest rate cut of 50 basis points to 1.00% -1.25% overnight.

As of the close in the afternoon, 10-year main contracts rose 0.42%, and the 5-year main contracts rose 0.28%. Two-year main contracts rose 0.11%.

On March 4, the People’s Bank of China announced that current total liquidity of the banking system was at a reasonable and sufficient level, and no reverse repurchase operation would be launched.

In view of the expiration of today’s non-reverse repurchase, the central bank achieved zero investment and zero return, Sina Finance noted.

The US Federal Reserve cut interest rates by 50 basis points on Tuesday in an emergency move to protect the United States from the economic shock of the coronavirus epidemic. This is the first time the Federal Reserve has taken such action since the financial crisis in December 2008.

This time the interest rate cut brought the benchmark interest rate down to the target range of 1% -1.25%.?

Chris Gill

With over 30 years reporting on China, Gill offers a daily digest of what is happening in the PRC.

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