Market Commentary - Foreign Markets
Chinese Markets Decline After PBoC Lowers Benchmark Rate As on : 22-Jul-24  16:05

Asian stocks fell broadly on Monday as Joe Biden announced his withdrawal from the 2024 presidential race against Donald Trump and China's central bank lowered its one-year benchmark loan prime rate to bolster a slowing economy.

China's Shanghai Composite index dropped 0.61 percent to 2,964.22, getting little lift from the surprise 10-bps cut in short-term rates by the country's central bank.

China lowered its short-term policy rate as well as benchmark lending rates on Monday, in order to prop up growth.

The People's Bank of China cut the interest rate on seven-day reverse repos to 1.7 percent from 1.8 percent.

The action was aimed to strengthen counter-cyclical adjustments to better support the real economy, the central bank said.

On Monday, the PBoC conducted CNY 58.2 billion of seven-day reverse repos. The operation will help to keep reasonable and ample liquidity in the banking system, the bank added.

After cutting seven-day reverse repo rate, the central bank lowered the one-year loan prime rate to 3.35 percent from 3.45 percent.

Similarly, the five-year LPR, the benchmark for mortgage rates, was trimmed to 3.85 percent from 3.95 percent. The five-year LPR was last lowered by 5 basis points in February.

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