China cuts reserve requirement as shares sink further

China cuts reserve requirement as shares sink further

China’s central bank has cut its reserve requirement ratio for the fifth time since February 2015, as it attempts to prop up its slowing economy.

Its reserve requirement ratio – the amount of cash that banks must hold in reserve in case of economic difficulty – has been lowered by 50 basis points for all banks effective from March 1st.

As it deals with a dramatically slowing economy, the Chinese central bank have implemented an aggressive easing policy designed to keep the country’s economy afloat, and last cut the requirement in October, alongside a further reduction in interest rates.

Chinese shares in decline

Chinese shares declined again on Monday on a further weakening of the yuan. The Shanghai Composite fell 2.7 percent after a brief recovery on Friday, hitting a 15-month low as the yuan hit its lowest point against the dollar in a month.

The Hang Seng was also hit, but fared slightly better, closing down 1.3 percent.