China’s raising of its interest rate by 25 base points has sent Asian stockmarkets into a spin, following on from falls in Europe yesterday, and falls in the value of the dollar and the euro.
Hong Kong, Singapore, Australia, Taiwan and South Korea all recorded losses along with Tokyo, to send the region’s markets to a two-month low and extended the losing streak to four days, although in late trading those losses were pared back before the close.
Analysts say that China is now worried inflation may rise and the central bank is keen to prick a property bubble that is outpacing growth. While the Chinese move is being seen as being driven mainly by domestic factors, the news was not lost on America.
Following the news the US Treasury pulled back from tabling new measures to pressure China into raising the value of its currency. China has been accused of keeping the Yuan artificially low to boost exports, and not doing enough to fuel domestic consumption.