Offshore yuan rises as PBOC plans further rate cuts

The offshore yuan strengthened to around 7.32 per dollar, recovering from three days of losses, as planned rate cuts and reforms highlighted the government’s commitment to boosting the economy, reassuring investors.

Offshore yuan rises as PBOC plans further rate cuts

The central bank announced a shift in its monetary policy, prioritizing interest rate adjustments over quantitative targets for loan growth. This move is part of a broader interest rate reform program, which government advisors have called an "arduous task." In late September, China’s primary rate, the seven-day reverse repo rate, was reduced from 1.7% to 1.5%, the lowest level since at least 2012, to stimulate economic activity.

PBOC plans further rate cuts and RRR reductions in 2025

In mid-December, PBOC research director Wang Xin revealed plans to further cut interest rates and reserve requirements in 2025, citing room to lower the reserve requirement ratio (RRR), currently at 6.6%, to inject liquidity and support growth.