China’s central bank took a sharp turn Tuesday evening, when it promised to inject money into a temporary liquidity shortage after rejecting banks’ pleas for cash over the past two weeks.
The move has been interpreted as regulators’ decision to end the credit crunch that caused interbank rates to surge to double digits and pounded the stock market into bearish territory.
The People’s Bank of China, or PBOC, has changed its stance, as starving the financial system of cash has been crippling the economy in a broader scope. The Shanghai Composite Index reported its biggest slump in four years on Monday, after the PBOC published an internal notice implying tight liquidity. The benchmark further tumbled 6 percent Tuesday before reversing the retreat on rumors of a declaration of support, which was issued by the bank on Tuesday night.
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Xinhua via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/TPULpbUMy7M/
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