It seemed that it was only after Asian equity markets fell did reports begin suggesting disappointment with the G20 meeting.  The narrative followed the price action rather than the other way around. Before that, at least, one newswire claimed China was the winner of at the G20 meeting.

Its currency policy was not criticized. Many, including US Treasury Secretary Lew, welcomed China’s clear communication and commitment to avoid a large depreciation of the yuan. The final statement expressed interest in looking into the expansion of the SDR, a favorite hobby-horse of the PBOC.  

However, this is to exaggerate expectations that the G20 were going to launch a new initiative. Although the IMF seemed to call for some unspecified global coordinated effort, there was not political will for it, and that was obvious before the weekend.  Moreover, the key concern about China is about the divergence between what officials say and what they do. The intentions of officials remain opaque. 

Today’s is the fifth consecutive session that the yuan has fallen. It closed at its weakest level since the markets closed for the Lunar New Year.    

On the other hand, China hinted at scope for monetary and fiscal support, and it wasted no time. After local markets closed, the central bank announced a 0.5% cut in the required reserve ratio.It now stands at 17%.While it was too late to help Chinese shares (Shanghai off 2.9% and Shenzhen off 5.4%), the reserve cut helped European bourses recoup some earlier losses. Near midday in London, the Dow Jones Stoxx 600 is off about 0.65%, lead by a 1.1% drop in financials.Banks and diversified financials are bearing the brunt. The S&P 500 also recovered from earlier steeper losses.  

The Japanese yen gained nearly 1% since late-Friday. The weakness in equities and the easing US yields play a role. The G20 meeting seemed more concerned about yen weakness than yuan’s decline, and this despite the strong rise in February (~7.25%). However, the discussion probably means that the bar is high for BOJ intervention, which it has confirmed it did not conduct this month(contrary to some market rumors) and for fresh monetary action at the BOJ meeting in mid-March.