Market Highlight 25.09.2024

The People’s Bank of China (PBOC) yesterday announced a series of measures aimed at supporting the economy and boosting the country’s weakening stock market, demonstrating policymakers’ resolve following dismal data on the labor market, spending, and inflation last month. The data indicated that the world’s second-largest economy risks missing the government’s growth target of around 5% for 2024 due to prolonged deflation, an intensifying crisis in the real estate market, and rising tensions in international trade. On Monday, the PBOC announced it would cut its benchmark interest rates and reduce the reserve requirement ratio (RRR) for banks to free up additional resources for lending. The governor of the PBOC stated that further monetary easing is on the horizon, with an additional reduction in the RRR expected before the end of the year. Moreover, additional support programs are being planned to revive the country’s weakening stock market. The CSI 300 Index has dropped 2,3% year-to-date and has lost about one-third of its value compared to 3 years ago, highlighting how China’s economic slowdown has eroded investor confidence.

The Chinese Yuan (CNY) strengthened to its highest level in 16 months against the USD ($7,03) yesterday following the PBOC’s unexpected announcement of new economic stimulus measures. In contrast, the USD Index posted a lackluster trading session, falling nearly 0,6% to 100,3 by the end of the day after data showed a sharp drop in U.S consumer confidence in September.

Domestically, the USD/VND interbank exchange rate adjusted downward by around 30 VND yesterday, following the rise of the Yuan (+0.3%) and the weakening of the USD during the afternoon session. The exchange rate is expected to continue its downward adjustment today, with trading expected to hover around 24.550 - 24.640.

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