When central banks increase reserve ratios its like using a hammer to whack a recalcitrant mule (or in the terms of the mafia: you dont listen to me i'm going to f*** you up).
Some say it is a smart strategy for China, running a trade surplus, to match US and Euro currency devaluation......as long as asset bubbles don't get too out of hand at home. I tend to agree. Why did China keep buying US bonds after announcing in Feb last year its serious concerns about Obama's printing presses?
When such statements are made public they are couched in softer sounding 'fed speak' but make no mistake to the professionals they are reading this loud and clear.
The interesting part from here is what happens afterwards. If markets temporarily go down but then recover and the party continues look for the second increase in reserve requirements. Once this happens get ready for a nice shock in the near term.
And for those thinking that exposure to commodities and gold will protect you, think again. Look at the downwards movement of both when the announcement was made.
Gold could go up in the future if there is instability in currencies/cash liquidity, however the fact that gold falls on such announcements is an indication that it is also caught up in the carry trade. This will have to be worked through first.