The Reserve Bank of Australia building in Sydney, Australia, on Monday, Sept. 6, 2021.
David Gray | Bloomberg | Getty Images
Shares in the Asia-Pacific traded higher on Tuesday ahead of the Reserve Bank of Australia’s rate decision.
Japan’s Nikkei 225 recovered from earlier losses to rise 0.46% and the Topix index gained 0.28%.
The Hang Seng index in Hong Kong advanced 0.56% in early trade, while mainland China’s Shanghai Composite added 0.4%. The Shenzhen Component was fractionally higher.
The Kospi in South Korea rose 0.3% and the Kosdaq gained 0.92%.
In Australia, the S&P/ASX 200 ticked 0.14% higher.
The Reserve Bank of Australia is expected to raise interest rates by a half point to 2.35%, according to a poll by Reuters. The Australian dollar was slightly stronger at $0.6828 in morning trade.
MSCI’s broadest index of Asia-Pacific shares outside of Japan rose 0.44%.
On Monday, the People’s Bank of China announced it would cut the foreign exchange reserve requirement ratio, or the amount of FX reserves that financial institutions must hold, to improve the ability of financial institutions to use foreign exchange funds.
Starting Sept. 15, the RRR will be 6%, down from 8%.
“This cut should help increase FX liquidity and thus lower depreciation pressure for CNY. While the actual impact on FX liquidity is small … this cut serves as a strong policy signal that the PBOC is uncomfortable with the rapid depreciation of the currency,” analysts at Goldman Sachs Economics Research wrote in a note late Monday.
U.S. markets were closed overnight for a holiday.
In oil markets, U.S. crude extended gains from the previous session, while Brent crude declined slightly.
Read More: Asia-Pacific markets trade higher; Australian central bank decision ahead