The New Zealand dollar gave up early gains against its peers after China cut its one-year benchmark lending rate but left its five-year rate unchanged.
The one-year benchmark lending rate was cut by 10 basis points, while the five-year rate was left unchanged, contrary to expectations for 15 basis-point cuts to both. Over the weekend, China pledged to coordinate financial support to resolve local government debt problems.
Local government finances have worsened due to the prolonged weakness in the property sector, causing a credit crunch for a number of developers. Last week, China unexpectedly lowered key policy rates for the second time in three months in a bid to revive the faltering post-Covid economic recovery, rising deflation risks, and tightening credit conditions.
The one-year benchmark lending rate was cut by 10 basis points, while the five-year rate was left unchanged, contrary to expectations for 15 basis-point cuts to both. Over the weekend, China pledged to coordinate financial support to resolve local government debt problems.
Local government finances have worsened due to the prolonged weakness in the property sector, causing a credit crunch for a number of developers. Last week, China unexpectedly lowered key policy rates for the second time in three months in a bid to revive the faltering post-Covid economic recovery, rising deflation risks, and tightening credit conditions.