The offshore yuan remained stable at 7.30 per dollar as traders awaited the People's Bank of China's decision on the One-Year Medium-Term Lending Facility rate later this week, looking for clues on future policy moves.
Offshore yuan remains unchanged against dollar
Last week, the central bank kept its one-year and five-year loan prime rates unchanged at historic lows of 3.1% and 3.6%, respectively, in line with market expectations. Both rates had been reduced in previous months, with cuts in July and October. Investors are now evaluating China’s economic outlook following Beijing’s commitment to additional policy support for the coming year, including further rate cuts, reductions in banks' reserve requirements, and stronger fiscal measures.
Support from easing dollar
Externally, the yuan received some support on Monday from a slight easing of the US dollar after the Federal Reserve’s preferred inflation gauge came in below expectations, reigniting speculation of rate cuts.
