The Central Bank of the China surprised the markets by reducing the cost of money with a strong injection of liquidity. The decision came the day afterlatest survey on GDP, which highlighted a slowdown of the Asian giant: the Chinese economy made progress by 7,7% in 2013 and this year could register the weakest growth rate since 1989.
The new liquidity arriving from Beijing has given new breath to the world stock exchanges, starting with the Asian lists. The Nikkei index reached 15.795,96 points at the end of the session, gaining 0,99%. An increase also linked to the weakening of the yen and to the positive expectations on the data relating to corporate profits in Japan, which made up most of the losses accumulated in the last three negative sessions.
The liquidity injection from China is worth over 255 billion yuan, equal to 42 billion dollars. The Chinese central bank, faced with signs of a possible surge in reference rates, announced late on Monday that it had directly provided liquidity to some banks through a fund for short-term loans, and that it intends to do the same in the first part of the day today.
According to market observers, it has never happened that the central bank openly declared its intentions with respect to the injection or draining of funds in regular liquidity operations. The weighted average of the seven-day rate on the repo segment, considered the best indicator of general liquidity conditions, fell by more than one percentage point in the first part of today, down to 5,40%, compared to yesterday's close indicated at 6,5920%.
