Investing.com - The People’s Bank of China said Wednesday that it cut banks' reserve requirement ratios by 0.5%, in an effort to boost lending and spur economic activity in the world’s second largest economy.
China's central bank announced that it lowered the amount of deposits it requires banks to hold as reserves to 19.5% from 20.0% effective February 5 in a surprise decision.
The move came after a pair of reports released over the weekend showed that activity in China's manufacturing sector contracted last month, adding pressure on policymakers to stimulate a faltering economy.
Data released earlier showed that the HSBC/Markit China services purchasing managers' index fell to an eight-month low of 51.8 in January from 53.4 in December, missing expectations for a reading of 52.8.
Assets sensitive to China's growth outlook rallied following the announcement.
Copper jumped to $2.600 a pound, compared to $2.563 ahead of the announcement.
Meanwhile, AUD/USD rose to 0.7846 from 0.7785, while NZD/USD spiked to 0.7425 from 0.7380 earlier.