Worries over a Greek debt default had sent markets lower on Friday but today the mood was buoyed by a decision by China's central bank to cut the required reserve ratio
for banks by 1%.
Banks have been collecting gold as the Central Bank raised the required reserve ratio
for lira liabilities that can be held in gold from 10 percent to 20 percent last year.
The bank could impose a higher required reserve ratio
on banks whose leverage ratio is 3 percent or less.
As calls grew louder from analysts and investors for further measures from Beijing to support the economy, China's central bank on Thursday completed its largest weekly injection of funds into the financial system in seven months -- a move traders saw as a substitute for a cut in banks' required reserve ratio
The CBE had previously reduced the required reserve ratio
from 14 to 12 per cent in March.
The lending rate offered to Taiwanese enterprises by Taiwanese banks in China is currently set at LIBOR plus 300-350 basis points, and if deducting the required reserve ratio
of 1%, the net interest margin stands at 200-250 basis points.
The 600 basis points of required reserve ratio
(RRR) hikes between January 2010 and June 2011 to a record level of 21.
As of Friday, the required reserve ratio
for foreign-exchange deposits with maturities of one month to one year was reduced from 12 percent to 11.
5 percent, and increased the required reserve ratio
by 200 basis points to ensure an overall tightening of monetary policy.
25% and reduce the required reserve ratio
by 2 percentage points to 6 percent as of April 1, 2010.
If implemented, the move would be the boldest so far and would complement previous measures by the CBK, most notably the cuts to interest rates and the reduced required reserve ratio
During the period, the central bank increased the required reserve ratio
15 times, by a total of 8.