At close of trade, the benchmark Shanghai Composite Index surged by 1.36%, or 43.54 points, to 3,243.45. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 1.21%, or 25.19 points, to 2,113.27. The blue-chip CSI300 index increased 0.92%, or 36.85 points, to 4,052.28.
Beijing on Monday vowed to ramp up stimulus efforts in the third quarter, as the country struggles with slowing growth in the face of COVID-19 lockdowns and a potential energy shortage. It's crucially important for the country to adopt supportive policies this quarter, Yang Yinkai, deputy secretary general at the National Development and Reform Commission, said in Beijing on Monday.
The People's Bank of China also announced a cut to the amount of foreign exchange required to be held by local institutions, indicating that the government plans to keep the yuan from falling any further. News of the stimulus helped offset concerns over China introducing new COVID-19 curbs in several cities.
CURRENCY NEWS: China's yuan rebounded from a two-year low against the dollar on Tuesday despite weaker mid-point fixing by central bank, as the authorities rolled out fresh policy measures aimed at stabilising its recent rapid fall. On Monday, the People's Bank of China announced it would cut the foreign exchange reserve requirement ratio, or the amount of FX reserves that financial institutions must hold, to improve the ability of financial institutions to use foreign exchange funds. Starting Sept. 15, the RRR will be 6%, down from 8%. This cut should help increase FX liquidity and thus lower depreciation pressure for CNY. Prior to market opening, the PBOC set the midpoint rate CNY=PBOC at 6.9096 per dollar, 98 pips or 0.14% weaker than the previous fix of 6.8998. In the spot market, the onshore yuan rebounded from a more than two-year low of 6.9445 per dollar hit in the previous session to trade at 6.9396 by midday.
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