The People’s Bank of China’s (PBOC) latest stimulus measure should be positive for the region if it prevents a further slowdown of the Chinese economy, the Bangko Sentral ng Pilipinas (BSP) said.
On Tuesday, the PBOC added cash to China’s financial system after it auctioned 30 billion yuan or $4.7 billion worth of seven-day reverse-repurchase contracts in its open-market operations at a yield of 2.25 percent.
The PBOC also devalued the yuan anew by setting the reference rate at 6.4746 against Monday’s close of 6.4808.
This followed after Chinese monetary authorities said that China’s monetary policy must be more flexible and fiscal policy more forceful as leaders create appropriate conditions for structural reforms.
“To the extent the stimulus measures will ensure that a significant Chinese economic slowdown is forestalled, we see these as positive for the region, given the key role China plays in regional trade,” BSP Governor Amando Tetangco Jr., said in a text message to reporters.
Tetangco also stressed that the markets would likely wait for more specifics, particularly on the liquidity operations of the PBOC, and if there would be further moves to depreciate the yuan.
“Trading is relatively thin ahead of the holidays, so it may take some time for markets to digest the full implication of the new measures,” he said.
In Tuesday’s trade, the peso slightly weakened against the US dollar, closing at P47.33 to $1. The local currency lost 3 centavos from Monday’s finish.
The peso opened at P47.28 to $1 at the Philippine Dealing System before trading between P47.25 and P47.35.
Total volume transacted rose to P394.3 million from P288.2 million in the previous session.