The offshore yuan strengthened to 7.32 per dollar on Monday, reaching its highest level in three weeks, as the People's Bank of China (PBOC) kept key lending rates unchanged in January, as expected.
Yuan rises as PBOC keeps rates, GDP surges
The central bank maintained the 1-year Loan Prime Rate (LPR) at 3.1%, which serves as the benchmark for corporate and most household loans, while the 5-year LPR for mortgage loans remained at 3.6%. This decision came ahead of Donald Trump’s inauguration on Monday. The yuan has fallen over 3% since his election in November, highlighting trade policy uncertainties. Though reports suggest a gradual implementation, Trump has threatened to impose tariffs as high as 60% on Chinese imports during his second term.
China’s Q4 GDP beats forecast, unemployment rises
Meanwhile, recent data revealed that China’s GDP grew 5.4% year-on-year in Q4 2024, surpassing expectations and pushing full-year growth to 5%. Following recent stimulus measures, industrial production, retail sales, and new home prices also showed improvements. However, the unemployment rate rose slightly to 5.1% in December, marking a three-month high.
