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by The offshore yuan has fallen past 7.23 per dollar (USD/CNH), marking its third straight session of decline. This is because the People’s Bank of China (PBoC) decided to keep key lending rates unchanged during its May fixing. Despite this, markets still hope for further monetary easing to boost economic growth.
USDCNH – China Holds Lending Rates Steady in May
USDCNH – China Holds Lending Rates Steady in May
The PBoC kept the one-year and five-year loan prime rates steady at 3.45% and 3.95%, respectively. These rates, being at historic lows, highlight China’s fragile economic recovery. The decision aligns with market expectations and reflects the central bank’s cautious approach amid mixed economic signals.
Recent economic data from China for April presented a mixed picture. While industrial output growth was sustained, the jobless rate hit a five-month low, and retail turnover showed sluggish performance. These mixed signals suggest a slow and uneven recovery for the world’s second-largest economy.
Measures to Stabilize the Yuan
Last week, the PBoC maintained the medium-term lending rate at 2.5%. This move is part of broader efforts to stabilize the yuan and support economic growth. The central bank’s actions indicate a strategic approach to managing economic recovery without aggressive rate cuts.
Beijing’s Property Market Measures
To support its struggling property market, Beijing has introduced significant measures. These include easing mortgage regulations and encouraging local governments to purchase unsold homes. These steps are expected to relieve the sector and stimulate economic activity.
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