China’s central bankers announced Wednesday that they would be injecting another huge amount of cash into the stock market and imposing trading rules to curb recent volatility.
In a move intended to cushion the recent market crash, the People’s Bank of China dumped $22 billion (140 billion yuan) into the Chinese stock market this morning and the government will limit trading in index futures.
China has tried propping up its stock market before with liquidity injections with little success.
China had just yesterday lowered interest rates by another .25% to 4.6% – a more traditional central bank move.
Lowering interest rates by most central bankers is intended to move liquidity from the central banks and into the hands of businesses and consumers with the hope of stimulating spending, investment and growth. But in China, the central bank is a buffer between the rest of the world and the Asian giant. The move also signals to the world that China’s economy may be worse than the government is reporting.
Despite multiple equity injections and several interest rate drops in the last few months, it appears – that China just hasn’t been able to help itself.