China's Yuan Surges Amid Global Monetary Policy Shifts
China's yuan hit a 16-month high after new stimulus measures, lifting broader markets and the euro. The Australian dollar also rose to a 2024 peak following the central bank's commitment to addressing inflation. These global monetary shifts have prompted varied responses from other currencies, including the yen and sterling.
China's yuan reached a 16-month high on Tuesday, following the introduction of stimulus measures that invigorated broader markets and bolstered the euro. The Australian dollar also touched its peak for 2024 after the central bank reaffirmed its goal of curbing inflation.
Beijing's recent initiatives, such as a planned 50 basis point reduction in banks' reserve requirements and additional lending rate cuts, have propelled the yuan upwards. Initially, the yuan weakened in offshore trading post-announcement, but it later climbed by 0.38% to 7.0310 per dollar as optimism around growth prospects grew.
China-sensitive assets such as stocks, commodities, and the euro rallied concurrently. IG Chief Market Strategist Chris Beauchamp noted that the U.S. Federal Reserve's recent outsized rate cut had provided other central banks, including China's, with the 'air cover' to initiate their own rate reductions. Meanwhile, the Reserve Bank of Australia held interest rates steady but hinted at future rate hikes, maintaining its stance on inflation control.
(With inputs from agencies.)
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