Decelerating growth and still-soft inflationary pressures will prompt further policy easing in the coming months. One more 25bps policy rate cut and two more 50bps cuts in the reserve requirement ratio (RRR) is expected from Beijing in H1, as well as targeted supported and fiscal stimulus measures. Standard Chartered says they believe that this policy easing will help to stabilise growth and revive activity in H2-2015. The central parity fixing of the Chinese yuan (CNY) was set at 6.1395 on Monday. The weaker fixing ended a streak of CNY appreciation on the day of China’s trade data release. Monday’s trade release was disappointing – the March trade surplus came in at USD 3bn, against market forecasts of USD 40bn. “Though the data may have been distorted by the Lunar New Year holidays, we expect weaker macroeconomic data for Q1 to weigh on the CNY. That said, the authorities are likely to remain proactive in curbing volatility ahead of the IMF meeting in May, when the Special Drawing Rights (SDR) basket will be reviewed.” Added Standard Chartered
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