Chinese rate cut pressures Aussie dollar

Financial and commodity markets analytics

The Australian dollar is trading lower today after the Chinese central bank cut interest rates for the 5th time since November, and also lowered the reserve requirements for banks to keep cash in the vault.

At 3.26pm (GMT) the Australian dollar was trading at US71.12c after reaching a high of US72.49c in yesterday’s trade.

To fend off the stock market crash, the Chinese government have devalued their currency, slashed rates and cash requirement for banks in order to stop a further dive in the stock market which has fallen 15% in just 2 days leaving investors to wonder is this the end of the pain.

"Frankly this shows a bit of panic in my mind," said Andrew Polk, resident economist at the Conference Board in Beijing.

Noting the rate cut was unexpected and a last resort Mr polk also noted,

"This is a big-bang move, It's meant to address some real issues and also prevailing market sentiment over the past two days."



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