China Pumps Record 1.4 Trillion Yuan into Money Markets: Impact on Crypto?

• China's Monetary Injection into the Economy
• The Current Economic Scenario
• The Impact of Monetary Injection
• Economist Viewpoint
• BRICS Alliance Marching Towards 2024

China's Monetary Injection into the Economy

The BRICS member, China, is significantly increasing its financial support to its domestic economy by injecting a large amount of Chinese Yuan into the money markets. In this initiative, the People's Bank of China (PBOC) has provided commercial lenders with loans worth trillions of Chinese Yuan for a year, marking a record-breaking injection into medium-term policy loans for the nation.

The Current Economic Scenario

This financial boost comes in the wake of China's unstable economic growth, which has been affected by a decline in the housing market, hence signaling a reduction in demand. Despite the economic challenges China has faced post-COVID-19, the administration believes that a pro-growth stance could potentially uplift the nation's markets and aid in the recovery from the ongoing financial struggles.

The Impact of Monetary Injection

Through this aggressive stimulus, the PBOC aims to solidify the Chinese Yuan amidst the robust competition from the US dollar and other global markets. It is anticipated that this fiscal stimulus will strengthen the Chinese Yuan and provide a much-needed boost to the ailing housing market in the country. Shortly after the PBOC injected 1.4 trillion Chinese Yuan into the money markets, a positive reaction was seen in the Asian stock markets. Specifically, India's Sensex Index saw a rise of nearly 900 points, and China's Hang Seng Index rallied by 3%, amounting to a 400-point increase.

Economist Viewpoint

Sharing her perspective on the matter, Serena Zhou, an economist at Mizuho Securities, mentioned to Bloomberg that although a lack of confidence continues to hinder growth, the lower rate will provide some respite to the economy. She further forecasts 20-basis-point reductions in interest rates and 50-basis-point cuts to the RRR next year, suggesting that the scope for additional monetary easing is relatively limited.

BRICS Alliance Marching Towards 2024

All these developments indicate that BRICS nations are well-prepared to compete in the global markets by 2024. The BRICS partnership aims to commence 2024 on a strong footing, with vast stimulus packages planned to bolster the economy.

Edited by Jonathan Stoker