Mixed actions; RBA hikes interest rates

The Reserve Bank of Australia building in Sydney, Australia, Monday, September 6, 2021.

David Gray | Bloomberg | Getty Images

Stocks in the Asia-Pacific region traded mixed on Tuesday as Australia’s central bank raised interest rates again.

Japan’s Nikkei 225 rebounded from previous losses to rise slightly and the Topix index was close to the flatline.

The Hang Seng Index in Hong Kong gave up early gains to fall 0.42%. Mainland China’s Shanghai Composite gained 1.01% and Shenzhen Component rose 0.655%.

The Kospi in South Korea was little changed and the Kosdaq gained 0.68%.

In Australia, the S&P/ASX 200 rose slightly.

The Reserve Bank of Australia raised rates by half a point to 2.35%, as expected by analysts polled by Reuters. The Australian dollar was at $0.6808 after the move.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan was roughly flat.

On Monday, the People’s Bank of China announced that it would reduce the required foreign exchange reserve ratio, or the amount of foreign exchange reserves that financial institutions must hold, to improve financial institutions’ ability to use foreign currency funds.

From September 15, the RRR will be 6%, compared to 8% previously.

“This reduction should help increase FX liquidity and therefore reduce CNY depreciation pressure. Although the actual impact on FX liquidity is small…this reduction serves as a strong policy signal that the PBOC is not is not comfortable with the rapid depreciation of the currency,” Goldman Sachs Economics Research analysts wrote in a note late Monday.

On Tuesday, the PBOC pegged the midpoint of the yuan against the dollar at 6.9096, the weakest since Aug. 25, 2020, according to Wind Information.

US markets were closed overnight for a holiday.

In oil markets, US crude extended its gains from the previous session, while Brent crude edged lower.

– CNBC’s Evelyn Cheng contributed reporting.

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