Dollar Recovery after China Raises Reserve Requirement Ratio

Dollar is trying to recovery from intraday low after market sentiments are weighed down mildly by more tightening from China. China raised the so called bank reserve requirement ratio by 50bps to “appropriately control” credit and loans. This was the second reserve increase in two weeks as inflation is viewed as a serious threat to the Chinese economy. There are still speculations that rate hike is imminent, in addition to the current measures. Major European indices turn red after the news while US markets are also pointing to a mildly lower open.