Offshore yuan steady after PBoC decision

The offshore yuan steadied around 7.11 per dollar on Thursday, as China signaled reduced urgency for further monetary policy easing amid persistent domestic and external headwinds.

The one-year Loan Prime Rate, the benchmark for most corporate and household lending, was kept unchanged at 3%, while the five-year LPR, which serves as the key reference for mortgages, remained at 3.5% after a 10 bps cut in May 2025.

This decision came after the central bank earlier in the month opted to leave the seven-day reverse repo rate unchanged, reinforcing expectations of a more cautious policy stance.

Recent economic data showed that fixed-asset investment posted a notable contraction, industrial production and retail sales continued to lose momentum, and an unexpected decline in exports further deepened worries about China’s growth outlook.

Externally, the yuan came under pressure from a stronger US dollar, as markets scaled back expectations for a Federal Reserve interest rate cut in December.