The offshore yuan weakened to around 7.24 per dollar, approaching its lowest level in over three months, as investors awaited China’s Loan Prime Rate (LPR) decision later this week.
Offshore yuan falls ahead of LPR decision
Markets broadly expect the People’s Bank of China (PBOC) to keep both the one-year and five-year LPRs unchanged at 3.1% and 3.6%, respectively.
Last week, mixed economic data raised doubts about the effectiveness of Beijing’s recent stimulus measures. While China's retail sales in October exceeded expectations, industrial production growth slowed, underscoring persistent challenges in the manufacturing sector. Additionally, real estate investment saw a steep decline, exacerbating the ongoing property market slump. To address liquidity concerns, the PBOC executed its largest single-day cash injection since 2020 via seven-day reverse repos, aimed at offsetting the impact of maturing loans and tax payments.
Trump's hitting yuan
Further weighing on the yuan, the prospect of higher US tariffs under a renewed Trump administration could extend its weakness into next year, adding pressure to China's already fragile economic recovery.
