Forex. USDCNY: US Dollar Gains Value Against Renminbi As People's Bank of China Cuts Interest Rates

It is reported that the People's Bank of China made a statement regarding its intention to cut interest rates which was followed by actual interest rate cuts. In particular, Market Leader reports that interest rate cuts have been implemented for the first time since June 2012.

According to Masterforex-V Academy, the home for true experts in financial markets, reports that such a decision was made by the central bank as a measure included in the program aimed at backing the national economy and preventing it from a further slowdown.

China's major financial institution lowered the interest rates on annual credits and deposits form 6.31% by 0.4% and from 3% by 0.25% respectively. The changes are to take effect on December 22nd, 2014.

As for the reaction of financial markets, it was obvious. Stock indexes started growing instantly after the People's Bank of China made the statement.

Indeed, it is not accidental that the China government and financial authorities are desperately trying to hinder the current economic slowdown. The thing is that the Chinese economic growth has just reached its slowest pace in 5 years, which is a wakeup call. China is the world's second-biggest economy and the major manufacturer of consumer products in the world. While the entire world is in financial struggle, international consumers are less willing to spend their money on various goods, including CHinese products, which definitely affects China's export-oriented economy, thereby making it reorient to domestic consumption, which  may take a lot of time.

As of Q3 2014, China's economy grew only by 7,3% relative to the same reporting period a year ago. Despite slowing down, the figures turned out to be slightly better than expected. At the same time, both Russia and China are trying to get rid of the US Dollar in their bilateral trade relations. The share of their national currencies in their trade relations is constantly growing due to new currency swaps. President Putin underlined his intention to keep on expanding the currency swaps, especially when it comes to energy exports.

USDCNY

As for the Renminbi, the Chinese currency is going down in value against the US Dollar, which is reflected in a rally seen in the market of USDCNY, Masterforex-V Academy reports. The price has come close to a major level of resistance, which is located at 6,1525. At the same time, the closest levels of support are the bottom of the ascending sloping channel and pivot 6,1155.