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India.com
5 days ago
- Business
- India.com
After giving weapons to Pakistan, China makes another SHOCKING move, trouble for US due to...
(File) Pakistan economy: China has enhanced its military and economic support to Pakistan after the latter suffered a humiliating defeat at India's hands in the recent military conflict, in which Pakistani forces employed Chinese-made weaponry, including fighter jets and long-range air-to-air missiles. According to reports, after weapons, Beijing has now opened up its coffers to bolster Islamabad, approving a commercial loan of $3.7 billion for the cash-strapped country, which will be made available before the end of June. China approves $2.4 billion loan to Pakistan However, apart from its primary purpose of boosting Pakistan's ruined economy, China's loan, which includes a $2.4 billion payout maturing in June, is being seen as another move by Beijing to counteract the dominance of the US dollar in global trade as the loan is will be made available in Chinese RMB, instead of USD. Citing government sources, Pakistan-based Express Tribune reported that Beijing has assured Islamabad in recent meetings that it will refinance loans maturing between March and June 2025. Pakistan has already repaid a $1.3 billion loan to the Industrial and Commercial Bank of China (ISBC) in three installments between March and April this year, the report quoted officials as saying. Pakistan forex reserves Meanwhile, the foreign exchange reserves at Pakistan's central bank stood at $11.4 billion after the International Monetary Fund (IMF) approved a $1 billion loan installment earlier this month. Islamabad's forex reserves are expected to rise to $12.7 billion after it receives the latest tranche of Chinese funds, the report said. The $2.1 billion or 15 billion Yuan loan will be sourced from three commercial banks, and China has extended it for three years, it added. Economists point out that a timely refinancing of Chinese funds was crucial for Pakistan to main its forex reserves in double digits by June end, failing which the country's foreign currency reserves would have fallen below $10 billion. Pakistan's deal with the IMF mandates that it boosts forex reserves to around $14 billion this fiscal year.
Hindustan Times
21-05-2025
- Business
- Hindustan Times
Pakistan misses FY 2024-25 growth target, eyes USD 4.9 billion in external loans
The Pakistani federal government has reportedly fallen short of its economic growth target for the fiscal year 2024-25, achieving a growth rate of just 2.68 per cent against a projected 3.6 per cent, as reported by ARY News on Tuesday, citing sources from Pakistan's National Accounts Committee. According to ARY News, the report was revealed during a meeting of the National Accounts Committee, chaired by Pakistan's Secretary of Planning. The meeting revealed that the country's economic output reached USD 411 billion, with per capita income increasing to USD 1,824. Sector-wise performance varied, with agriculture growing by 1.8 per cent during the first three quarters, while the industrial sector declined by 1.14 per cent. Notably, the services sector posted a strong growth of 39 per cent between July and March, as per ARY News. In parallel, Pakistan is preparing to raise USD 4.9 billion in external commercial financing for the next fiscal year (FY2025- 26), according to sources familiar with the matter. As part of its financing plan, the government intends to secure USD 2.64 billion in short-term loans from commercial banks at expected interest rates of 7-8 per cent, without strict conditions or performance benchmarks, as per ARY News. An additional USD 2.27 billion is also expected to come through long-term borrowing arrangements from commercial banks. This includes a proposal to obtain USD 1.1 billion from the Industrial and Commercial Bank of China (ICBC), along with USD 500 million each from Standard Chartered Bank and Dubai Islamic Bank. A commercial guarantee is also being sought for a USD 500 million loan from the Asian Development Bank (ADB), ARY News reported. Meanwhile, the International Monetary Fund (IMF) has set a target for Pakistan to boost its foreign exchange reserves to USD 13.9 billion by the end of June. The State Bank of Pakistan currently holds net reserves of approximately USD 14 billion, reportedly enough to cover three months of imports. (ANI)
Mint
20-05-2025
- Business
- Mint
China cuts benchmark interest rates for the first time in seven months to aid growth; PBOC cuts LPR by 10 bps to 3%
China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered deposit rates as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-U.S. trade war. The widely expected rate cuts are aimed at stimulating consumption and loan growth as the world's No. 2 economy softens, while still protecting commercial lenders' shrinking profit margins. Still, the size of the rate reductions was mild and reflected the incremental pace of monetary easing in recent years and what analysts interpreted as some wariness among policymakers for more aggressive steps while they navigate the trade war with the United States. The People's Bank of China said the one-year loan prime rate (LPR), a benchmark determined by banks, had been lowered by 10 basis points to 3.0%, while the five-year LPR was reduced by the same margin to 3.5%. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. Both rates are now at the lowest level since China ravamped the LPR mechanism in 2019. The lending rate cut was announced just after five of China's biggest state-owned banks said they had trimmed their deposit interest rates. Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China reduced deposit rates by 5-25 basis points (bps) for some tenors, according to rates shown on the banks' mobile apps. Reuters had reported on Monday that the banks planned to cut their deposit rates from Tuesday. The deposit rate reductions should guide smaller lenders in making similar cuts. Banking shares edged higher following the rate decision, with the CSI Bank Index rising 0.3%. The rate cuts are part of a package of measures announced by PBOC Governor Pan Gongsheng and other financial regulators before talks between China and the U.S. in Geneva earlier this month that led to a de-escalation in their trade war. Global investment banks are raising their forecasts for China's economic growth this year, after Beijing and Washington agreed to a 90-day pause on tariffs, despite uncertainty around Sino-U.S. trade negotiations. China's new home prices were unchanged in April from a month earlier, official data showed on Monday, extending the no-growth trend to nearly two years despite policymakers' efforts to stabilise the sector. Meanwhile, new bank loans also tumbled more than expected last month. Major Chinese banks cut deposit rates in October and July last year as their profits came under pressure after the PBOC lowered lending rates. Prior to that, the banks made three rounds of such deposit rate cuts in 2023. The Big Five lenders reported narrower margins on their first-quarter earnings and some a drop in profits as the banking sector is hit by a protracted economic slowdown. Commercial banks' net interest margin - a key profitability measure - dropped to a record low 1.43% in the first quarter of this year, official data showed. Net interest margins are expected to fall a further 10-15 bps this year as banks are in fierce competition to lure customers with cheap loans while credit demand remains weak, analysts at China International Capital Corp said in a note.
Yahoo
20-05-2025
- Business
- Yahoo
China cuts key rates to aid economy as trade war simmers
BEIJING/SHANGHAI (Reuters) -China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered deposit rates as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-U.S. trade war. The widely expected rate cuts are aimed at stimulating consumption and loan growth as the world's No. 2 economy softens, while still protecting commercial lenders' shrinking profit margins. Still, the size of the rate reductions was mild and reflected the incremental pace of monetary easing in recent years and what analysts interpreted as some wariness among policymakers for more aggressive steps while they navigate the trade war with the United States. The People's Bank of China said the one-year loan prime rate (LPR), a benchmark determined by banks, had been lowered by 10 basis points to 3.0%, while the five-year LPR was reduced by the same margin to 3.5%. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. Both rates are now at the lowest level since China ravamped the LPR mechanism in 2019. The lending rate cut was announced just after five of China's biggest state-owned banks said they had trimmed their deposit interest rates. Industrial and Commercial Bank of China (IDCBY, Agricultural Bank of China ( China Construction Bank ( CICHY) and Bank of China (BACHF, reduced deposit rates by 5-25 basis points (bps) for some tenors, according to rates shown on the banks' mobile apps. Reuters had reported on Monday that the banks planned to cut their deposit rates from Tuesday. The deposit rate reductions should guide smaller lenders in making similar cuts. Banking shares edged higher following the rate decision, with the CSI Bank Index rising 0.3%. Marco Sun, chief financial market analyst at MUFG Bank (China), said the rate cuts were aimed at boosting credit lending and stimulating consumption. "The central bank is likely to switch to a wait-and-see approach in coming months unless external geopolitical risks deteriorate enough to extinguish hopes that the economy can stabilise," Sun said. The rate cuts are part of a package of measures announced by PBOC Governor Pan Gongsheng and other financial regulators before talks between China and the U.S. in Geneva earlier this month that led to a de-escalation in their trade war. Global investment banks are raising their forecasts for China's economic growth this year, after Beijing and Washington agreed to a 90-day pause on tariffs, despite uncertainty around Sino-U.S. trade negotiations. "We still believe it will be quite challenging for Beijing to achieve its 'around 5%' growth target unless it rolls out a sizable stimulus package," Ting Lu, chief China economist at Nomura, said in a note this week. "Considering the respite on the trade war, Beijing might be under less pressure to introduce the necessary stimulus and reforms." Recent economic readings show growth remains patchy and lacklustre. China's new home prices were unchanged in April from a month earlier, official data showed on Monday, extending the no-growth trend to nearly two years despite policymakers' efforts to stabilise the sector. Meanwhile, new bank loans also tumbled more than expected last month. Tuesday's rate cuts were a pre-emptive move, said Xing Zhaopeng, senior China strategist at ANZ. "One purpose is to repair commercial banks' net interest margin and get prepared for the future," Xing said, expecting one more rate cut by the end of July. Nicholas Zhu, an analyst at Moody's, expects a prolonged period of low interest rates in China. "The reduction in deposit costs partly mitigates the impact of lower asset yields, which remain under pressure as banks are expected to support the real economy," said Zhu. Major Chinese banks cut deposit rates in October and July last year as their profits came under pressure after the PBOC lowered lending rates. Prior to that, the banks made three rounds of such deposit rate cuts in 2023. The Big Five lenders reported narrower margins on their first-quarter earnings and some a drop in profits as the banking sector is hit by a protracted economic slowdown. Commercial banks' net interest margin - a key profitability measure - dropped to a record low 1.43% in the first quarter of this year, official data showed. Net interest margins are expected to fall a further 10-15 bps this year as banks are in fierce competition to lure customers with cheap loans while credit demand remains weak, analysts at China International Capital Corp said in a note. Sign in to access your portfolio
CNA
20-05-2025
- Business
- CNA
China cuts key rates to aid economy as trade war simmers
BEIJING: China cut benchmark lending rates for the first time since October on Tuesday (May 20), while major state banks lowered deposit rates as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-US trade war. The widely expected rate cuts are aimed at stimulating consumption and loan growth as the world's No 2 economy softens, while still protecting commercial lenders' shrinking profit margins. The People's Bank of China said the one-year loan prime rate (LPR), a benchmark determined by banks, had been lowered by 10 basis points to 3.0 per cent, while the five-year LPR was reduced by the same margin to 3.5 per cent. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. The lending rate cut was announced just after five of China's biggest state-owned banks said they have trimmed their deposit interest rates. Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China reduced deposit rates by 5-25 basis points (bps) for some tenors, according to rates shown on the banks' mobile apps. Reuters had reported on Monday that the banks planned to cut their deposit rates from Tuesday. The deposit rate reductions should guide smaller lenders in making similar cuts. Banking shares edged higher following the rate decision, with the CSI Bank Index rising 0.7 per cent, outperforming the benchmark Shanghai Composite index. Marco Sun, chief financial market analyst at MUFG Bank (China), said the dual rate cuts were aimed at boosting credit lending and stimulating consumption. "The central bank is likely to switch to a wait-and-see approach in coming months unless external geopolitical risks deteriorate enough to extinguish hopes that the economy can stabilise," Sun said. Tuesday's rate cuts were a pre-emptive move, said Xing Zhaopeng, senior China strategist at ANZ. "One purpose is to repair commercial banks' net interest margin and get prepared for the future," Xing said, expecting one more rate cut by the end of July. The rate cuts are part of a package of measures announced by PBOC Governor Pan Gongsheng and other financial regulators before talks between China and the US in Geneva earlier this month that led to a de-escalation in their trade war. Global investment banks are raising their forecasts for China's economic growth this year, after Beijing and Washington agreed to a 90-day pause on tariffs, despite uncertainty around Sino-US trade negotiations. "We still believe it will be quite challenging for Beijing to achieve its 'around 5 per cent' growth target unless it rolls out a sizable stimulus package," Ting Lu, chief China economist at Nomura, said in a note this week. "Considering the respite on the trade war, Beijing might be under less pressure to introduce the necessary stimulus and reforms." Recent economic readings show growth remains patchy and lacklustre. China's new home prices were unchanged in April from a month earlier, official data showed on Monday, extending the no-growth trend to nearly two years despite policymakers' efforts to stabilise the sector. Meanwhile, new bank loans also tumbled more than expected last month.
