By Ambar Warrick
Investing.com– China’s yuan curbed recent losses on Tuesday after the People’s Bank attempted to boost liquidity in the country, while the Australian dollar rose slightly ahead of a broadly expected interest rate hike by the country.
The traded flat around two-year lows of 6.9315, after falling substantially in recent sessions. The currency has been hit particularly hard by slowing economic growth in China, as well as broad strength in the U.S. dollar.
The (PBoC) said on Monday that it will cut the amount of foreign exchange reserves needed to be held by financial institutions- a move that is likely aimed at supporting the yuan.
The move is expected to increase dollar liquidity in China and increase trading in the yuan, which the government believes will support the currency.
China also flagged increased stimulus measures in the third quarter, as it struggles to shore up economic growth amid crippling COVID-19 lockdowns. The PBoC has trimmed interest rates several times this year, which has weighed on the yuan.
The rose 0.4% to 0.6822 to the greenback, ahead of a widely expected interest rate hike by the central bank.
The (RBA) is expected to hike rates by 50 basis points to 2.35%, as it looks to curb runaway inflation in the country. The RBA has raised rates four times so far this year, as inflation reached a 30-year high.
Other Asian currencies rose slightly, recovering from recent losses as the fell slightly from a 20-year peak. were also muted.
The greenback strengthened sharply this year after the Federal Reserve began hiking interest rates at a fast clip to control inflation. Traders are now expecting a of a 75 basis point hike by the central bank later this month.
The traded sideways after data showed grew less than expected in July, indicating pressure on consumers from rising inflation. Worsening the situation, grew at a slower pace in July than June.
In Southeast Asia, the rose slightly after came in higher-than-expected for August. The reading puts more pressure on the central bank to raise interest rates.