BRICS member China is pumping the Chinese Yuan into the money markets extending support to its native economy. The People’s Bank of China (PBOC) amplified support by offering commercial lenders trillions worth of Chinese Yuan as one-year loans. The development is the largest injection for medium-term policy loans ever recorded in the Communist nation. The pump in money comes after China’s growth remained fragile amid a housing market dip highlighting less demand.
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BRICS: 1.4 Trillion Chinese Yuan Enters The Money Markets Through PBOC
PBOC offered medium-term policy loans to commercial lenders worth 1.4 trillion Chinese Yuan, which is equivalent to $112 billion. The aggressive stimulus aims to strengthen the Chinese Yuan amid an onslaught of the US dollar and the global markets.
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BRICS country China’s economy has been shaky post-COVID-19 with no recovery over the last three years. The pro-growth stance initiated by China could keep the nation’s markets up by trying to come out of the financial turmoil.
Therefore, the fiscal stimulus will strengthen the Chinese Yuan giving a boost to the BRICS nation’s dwindling housing market. Right after the PBOC pumped 1.4 trillion Chinese Yuan into the money markets, the Asian stock markets reacted positively. BRICS member India’s Sensex Index spiked nearly 900 points and China’s Hang Seng Index rallied 3% jumping 400 points.
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“Lack of confidence is still the key factor hindering growth, but a lower rate will help the economy,” said Serena Zhou, economist at Mizuho Securities to Bloomberg. “I still look for 20-basis-point cuts to interest rates and 50-basis-point cuts to the RRR next year – the room for further monetary easing is relatively limited.”
The development suggests that BRICS countries are fully equipped to take on the global markets in 2024. The BRICS alliance is trying to enter 2024 on the front foot with large stimulus packages to boost the economy.