Chinese stocks closed higher on Friday amid the People's Bank of China (PBOC)'s announcement that it would cut the foreign exchange risk reserve ratio for forward foreign exchange sales from 20 percent to zero.
The benchmark Shanghai Composite Index rose 0.39 percent to 4,162.88 points. The Shenzhen Component Index closed 0.06 percent lower at 14,495.09 points.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 1.04 percent to close at 3,310.3 points.
"Today, of course, the big announcement was that the PBOC has basically axed the forward forex risk reserve requirement. So financial institutions wanting to hedge using the U.S. dollar or other currencies don't need to give 20 percent of the value of the investment to the PBOC to hang on to for a while. The markets like this kind of signal ahead of the 'Two Sessions' because the yuan has been growing strongly and this will help to curb excessive currency value rises. Exporters will feel the benefit of this move, and we saw consumer stocks gain some ground today as a result of that," said Timothy Pope, a market analyst for China Global Television Network (CGTN).
"Otherwise, the big winners today were materials stocks. We saw steel, rare earth and critical minerals producers contributing a lot to the gains, as did energy and telecoms companies," said Pope.
Chinese shares close mixed Friday amid PBOC cuts FX risk reserve ratio
