China’s central bank has set the yuan at its strongest level against the U.S. dollar in more than three years, signalling Beijing’s growing confidence in its currency strategy.

China’s Yuan Fixed at Strongest Level Since 2023

The global financial landscape is shifting as the Chinese Yuan gains strength against the US dollar, hitting a near three-year high. Analysts say currency markets are becoming a new battleground between the US and China, with strategic moves impacting global trade and economic power. While the dollar remains dominant, the yuan’s rise signals a slow but significant shift in global financial dynamics.


Chinese Yuan Surges As Currency War Between US And China Heats Up

U.S. President Donald Trump said that his administration is considering a currency swap agreement with UAE. This comes as the ongoing Iran war continues to rattle global oil markets and regional economies. 


Mightly Dollar Bows Before Chinese Yuan in UAE

The Iran conflict is not just reshaping geopolitics, it’s also stirring a fresh debate in global finance.
As Tehran begins accepting payments in China’s yuan for oil, talk of a “Petroyuan” is back on the table.
But can the Chinese currency really challenge the dominance of the U.S. dollar, or is this momentum just temporary?
Take a look at this next report for more.

Iran War: Can Yuan Replace the Dollar in Global Oil Trade?

Can Yuan Replace the Dollar in Global Oil Trade

The United States’ military campaign against Iran, launched on February 28 in concert with Israel, is not merely a conflict over nuclear proliferation or regional dominance. It is, at its core, a war with deep economic underpinnings—rooted in Washington’s determination to protect the petrodollar system that has sustained American financial supremacy for half a century.


Hormuz Flashpoint Could Accelerate Global De-Dollarisation

The US dollar remains in strong demand as tensions in West Asia show no signs of easing, with markets bracing for further escalation. The absence of a diplomatic breakthrough over the weekend has kept financial markets on edge.

Investors are flocking to the dollar as a safe-haven asset, putting pressure on global currencies. In response, US trading partners are weighing options including rate hikes, market intervention and regulatory steps to stabilise their currencies.

The continued uncertainty is driving volatility across forex markets, with policymakers closely monitoring developments.

Dollar Surges As West Asia Crisis Fuels Demand, Global Currencies Under Pressure | Business Watch

The yuan climbed above the crucial 7 per dollar level for the first time since September 2024. That is on bets the people's bank of China will allow a steady appreciation of the currency to increase market confidence.

Yuan Rises Past 7/$ for First Time Since September 2024

China’s capital outflows accelerated sharply in July, reaching a record high as investors seized new opportunities to diversify overseas. According to Bloomberg, domestic banks transferred a net $58.3 billion on behalf of clients for securities investments, the largest monthly outflow since records began in 2010.&nbsp;The surge was fuelled by mainland demand for Hong Kong stocks and bonds, alongside the July expansion of the Southbound Bond Connect, which allows more offshore debt investments. At the same time, foreign funds continued to cut back holdings of Chinese government bonds, citing weaker returns compared to global alternatives.<h2>Beijing tolerates managed outflows</h2>China appears willing to absorb some capital outflows this year, as it uses a weak-dollar environment to cautiously liberalise its capital account. In June, regulators raised quotas for approved institutions to invest abroad for the first time in over a year, a move that supports the yuan’s long-term globalisation.Analysts say the current outflows differ from the destabilising 2015–16 capital flight, when fears of a yuan devaluation sparked sharp market turmoil. This time, flows are more structured and largely channelled into regulated programmes like Bond Connect and Stock Connect.

China’s rising capital outflows<figure class="table"><table><tbody><tr><td>Month (2025)</td><td>Net Capital Outflow via Banks</td></tr><tr><td>March</td><td>$32.1 billion</td></tr><tr><td>April</td><td>$28.4 billion</td></tr><tr><td>May</td><td>$36.7 billion</td></tr><tr><td>June</td><td>$41.5 billion</td></tr><tr><td>July</td><td>$58.3 billion (record high)</td></tr></tbody></table></figure>(Source: Data accumulated by Bloomberg)&nbsp;

The table highlights how July marked a sharp acceleration in outflows, nearly doubling from March levels. While earlier months saw steady increases tied to equity purchases, the July spike was directly linked to regulatory easing through the Bond Connect scheme.<h2>What it means?</h2>For Beijing, the challenge will be balancing liberalisation with financial stability. While capital outflows are part of a deliberate strategy to globalise the yuan, persistent foreign selling of Chinese bonds could put pressure on liquidity and the exchange rate.&nbsp;Still, with July’s record number driven by structured channels rather than panic selling, policymakers appear comfortable with the trend, at least for now.&nbsp;(With inputs from the agencies)&nbsp;&nbsp;

While foreign investors pared holdings of Chinese government debt, analysts stressed that current outflows are orderly and policy driven, in contrast with past destabilising episodes. 

China’s capital outflows accelerated sharply in July, reaching a record high as investors seized new opportunities to diversify overseas. According to Bloomberg, domestic banks transferred a net $58.3 billion on behalf of clients for securities investments, the largest monthly outflow since records began in 2010. The surge was fuelled by mainland demand for Hong Kong stocks and bonds, alongside the July expansion of the Southbound Bond Connect, which allows more offshore debt investments. At the same time, foreign funds continued to cut back holdings of Chinese government bonds, citing weaker returns compared to global alternatives. Beijing tolerates managed outflows China appears willing to absorb some capital outflows this year, as it uses a weak-dollar environment to cautiously liberalise its capital account. In June, regulators raised quotas for approved institutions to invest abroad for the first time in over a year, a move that supports the yuan’s long-term globalisation. Analysts say the current outflows differ from the destabilising 2015–16 capital flight, when fears of a yuan devaluation sparked sharp market turmoil. This time, flows are more structured and largely channelled into regulated programmes like Bond Connect and Stock Connect.

China’s capital outflows hit a record $58.3 billion in July as regulatory easing fuelled demand for overseas assets through Bond Connect and Stock Connect. Unlike the panic-driven flight of 2015–16, flows are structured and tolerated by Beijing as part of its yuan globalisation push.

China’s capital outflows hit record high after market liberalisation push

Is America's greatest fear finally coming true? America's biggest financial weapon - the US Dollar — is now being directly challenged by the new gold-backed Chinese Yuan. In this next report, we decode if the dollar's reserve status is being challenged in a changing global financial order.

Safe-haven status of US treasuries & Dollar reversing?

US President Donald Trump issued an executive order last month halting the development of a US Central Bank Digital Currency or the CBDC. This move aimed at regulating digital assets has unintentionally opened the door for global alternatives, most notably China's digital yuan, with over 98% of central banks worldwide engaged in CBDC development the US ban risks isolating the dollar from a rapidly evolving financial landscape. Watch in for more details!

Trump's CBDC ban boosts China's digital Yuan

US President Donald Trump issued an executive order last month halting the development of a US Central Bank Digital Currency or the CBDC. This move aimed at regulating digital assets has unintentionally opened the door for global alternatives, most notably China's digital yuan, with over 98% of central banks worldwide engaged in CBDC development the US ban risks isolating the dollar from a rapidly evolving Financial landscape. Watch in for more details!

Trump faces backlash as egg prices defy promises; tariffs, bird flu, and demand fuel price spiral

Suppose the weakening Chinese economy, rising dollar, and possibility of greater US Tariffs weren't bad enough. In that case, the yuan is now facing an extra downdraft: an influx of capital seeking to invest abroad.
Last year, investors in China sought greater profits elsewhere, leading to a record outflow of wealth.
Government data show that this led to banks' client payments for capital and financial transactions exceeding those for the current account, which mostly concerns trade. That's unprecedented.
Any further widening of that imbalance is likely to be accompanied by concerns about massive outflows of money, which would undermine Beijing's yuan management and heighten the likelihood of a regulatory crackdown.
The yuan has fallen around 2.8 per cent in the last three months, following the footsteps of all Asian currencies.
This is driven by the dollar's gain following Donald Trump's presidential victory on November 5.
<h2>Chinese yuan faces more downdraft</h2>
The value of the Chinese yuan fell this month again, marking its lowest point since September 2023.
Bloomberg estimates that local banks in China transferred a record-breaking 1.33 trillion yuan or 182 billion dollars to offshore investment accounts last year.
The fall in foreign direct investment flows, the eagerness of local enterprises to grow overseas, and the flight of capital from local equities have all put pressure on the nation's capital account.
These variables, taken together, have resulted in a rise in dollar demand, more outflows, and more yuan volatility.
(With the inputs from the agencies)

Business & Economy: The yuan has fallen around 2.8 per cent in the last three months, following the footsteps of all Asian currencies. The value of the yuan fell this month again.

Suppose the weakening Chinese economy, rising dollar, and possibility of greater US Tariffs weren't bad enough. In that case, the yuan is now facing an extra downdraft: an influx of capital seeking to invest abroad. Last year, investors in China sought greater profits elsewhere, leading to a record outflow of wealth. Government data show that this led to banks' client payments for capital and financial transactions exceeding those for the current account, which mostly concerns trade. That's unprecedented. Any further widening of that imbalance is likely to be accompanied by concerns about massive outflows of money, which would undermine Beijing's yuan management and heighten the likelihood of a regulatory crackdown. The yuan has fallen around 2.8 per cent in the last three months, following the footsteps of all Asian currencies. This is driven by the dollar's gain following Donald Trump's presidential victory on November 5. Chinese yuan faces more downdraft The value of the Chinese yuan fell this month again, marking its lowest point since September 2023. Bloomberg estimates that local banks in China transferred a record-breaking 1.33 trillion yuan or 182 billion dollars to offshore investment accounts last year. The fall in foreign direct investment flows, the eagerness of local enterprises to grow overseas, and the flight of capital from local equities have all put pressure on the nation's capital account. These variables, taken together, have resulted in a rise in dollar demand, more outflows, and more yuan volatility. (With the inputs from the agencies)

China's record capital outflows pile pressure on yuan

Asian shares broadly rose, tracking Wall Street's tech-led gains. Concerns about a faltering economy and heightened tensions with the US caused the yuan to fall to a one-year low against the dollar.

Japan, South Korea, and Australia saw increases in their equity benchmarks. Stocks in Hong Kong rose and fell as mainland Chinese markets dipped. 
 
US Futures pointed to a green open following Monday's record-setting finish for the S&amp;P 500 and a more than 1 per cent increase for the tech-heavy NASDAQ. 
 
The S&amp;P 500 notched its 54th closing record this year overnight. The dollar rose slightly after it ended a three-day losing run on Monday. 
 
The greenback's rise comes after a warning from president-elect Trump to the BRICS countries. 
 
In the previous session, the euro fell as much as 1.1 per cent, driven by the political turmoil in France, which put further pressure on bonds and stocks. An investment strategy that went bust in August this year the yen carry trade, is making a comeback.

Traders are getting ready for a deluge of economic data and speeches from Federal Reserve officials that will influence interest rate expectations. 
 
This week's noteworthy events include fed chair Jerome Powell's scheduled participation in a moderated conversation on Wednesday and Friday's payroll data is anticipated to reveal an increase in US hiring in November.

Bitcoin bulls are beginning to voice their scepticism as the seemingly inevitable rise towards a 100,000 dollars price mark hits a wall. The OG token bitcoin was steadily close to 95,800 dollars on Tuesday. It reached a record high of 99,728 dollars on November 22.

In commodities, crude was little changed as market participants waited for hints about OPEC+'s supply strategies in the lead-up to a crucial meeting on Thursday. Recent lacklustre price action drove an index of implied volatility to its lowest in roughly two months, while Brent oil traded near 72 dollars a barrel after finishing only 1 penny lower on Monday. 
 
Concerns over a surplus next year have traders predicting that the producer group would further postpone an end to supply cuts.

(With inputs from the agencies)

Asian shares broadly rose, tracking Wall Street's tech-led gains. Concerns about a faltering economy and heightened tensions with the US caused the yuan to fall to a one-year low against the dollar.

Asian shares broadly rose, tracking Wall Street's tech-led gains. Concerns about a faltering economy and heightened tensions with the US caused the yuan to fall to a one-year low against the dollar. Japan, South Korea, and Australia saw increases in their equity benchmarks. Stocks in Hong Kong rose and fell as mainland Chinese markets dipped. US Futures pointed to a green open following Monday's record-setting finish for the S&P 500 and a more than 1 per cent increase for the tech-heavy NASDAQ. The S&P 500 notched its 54th closing record this year overnight. The dollar rose slightly after it ended a three-day losing run on Monday. The greenback's rise comes after a warning from president-elect Trump to the BRICS countries. In the previous session, the euro fell as much as 1.1 per cent, driven by the political turmoil in France, which put further pressure on bonds and stocks. An investment strategy that went bust in August this year the yen carry trade, is making a comeback. Traders are getting ready for a deluge of economic data and speeches from Federal Reserve officials that will influence interest rate expectations. This week's noteworthy events include fed chair Jerome Powell's scheduled participation in a moderated conversation on Wednesday and Friday's payroll data is anticipated to reveal an increase in US hiring in November. Bitcoin bulls are beginning to voice their scepticism as the seemingly inevitable rise towards a 100,000 dollars price mark hits a wall. The OG token bitcoin was steadily close to 95,800 dollars on Tuesday. It reached a record high of 99,728 dollars on November 22. In commodities, crude was little changed as market participants waited for hints about OPEC+'s supply strategies in the lead-up to a crucial meeting on Thursday. Recent lacklustre price action drove an index of implied volatility to its lowest in roughly two months, while Brent oil traded near 72 dollars a barrel after finishing only 1 penny lower on Monday. Concerns over a surplus next year have traders predicting that the producer group would further postpone an end to supply cuts. (With inputs from the agencies)

Global markets rise, Yuan falls, Bitcoin faces resistance

The yuan's use in international payments fell by the highest on record last month. This is based on transaction data gathered by international financial messaging provider swift.

Use of Yuan in Global Payments Drop Sharply

Now, we look at the rise in the use of yuan in cross-border trade settlements this year. As part of Beijing's efforts to elevate the yuan's profile in international business, its use for global transactions has increased by over 20 percent this year.

Beijing's Yuan Push as Global Currency in Focus

There is a profound change taking place in the world of finance. The US dollar has dominated global investment and commerce for many years. However, a fresh rival is now on the rise: the Chinese Yuan. As a result of China's deliberate attempts to lessen its reliance on the dollar, the yuan now accounts for a record portion of international payments. This achievement is a major step toward the creation of a more multipolar global monetary system.

Beijing's currency push continues despite economic headwinds | World Business Watch | WION

The global financial landscape is undergoing a seismic shift. For decades, the U.S. Dollar has reigned supreme, dominating international trade and investment. But now, a new challenger is emerging: the Chinese Yuan. The yuan's share in global payments has reached a historic high, a testament to China's strategic efforts to reduce reliance on the dollar. This milestone marks a significant step towards a more multipolar international monetary system.

China's currency gains ground amid downturn | World Business Watch | WION

Now, we look at the new trend where Russia's embrace of the Chinese Yuan is stalling. President Vladimir Putin's war economy, which has been fueled by the quick adoption of the Chinese Yuan in response to the diplomatic crisis surrounding Russia's invasion of Ukraine, may have reached a breaking point. This is according to a Bloomberg report.

Russia's embrace of Chinese Yuan stalls

The Chinese Yuan is increasingly becoming a major part of the global payments system. That comes at the expense of Euro, whose share continues to decline. At a time of great geopolitical uncertainty, the rise of Chinese Yuan has a number of takeaways for the global economy.

China backs Yuan in its fight back against US domination

The People's Bank of China (PBOC) has set a daily reference rate for the yuan at 7.0968 per dollar, a move indicating the country's efforts to support its currency while the dollar gains strength.<o:p></o:p>

According to Bloomberg, this rate was set within the recent trading range, after the offshore yuan experienced its most a major weakening in three weeks. <o:p></o:p>

The fixing, set by the PBOC at 9:15 a.m. local time, determines the range within which the yuan can trade, a range limited to 2 per cent.<o:p></o:p>

The gap between the set fixing and the market's expectations reached 1597 pips, marking the widest disparity recorded since Bloomberg began its daily survey in 2018. <o:p></o:p>

“The strong fix simply underscores policymakers’ desire and will to pursue RMB stability,” Bloomberg quoted Christopher Wong, an FX strategist at Oversea-Chinese Banking Corp, as saying. <o:p></o:p>

He further added, “Clearly the fix is outside of consensus estimates, but the strong fix shows that policymakers want to send a strong message to markets.”<o:p></o:p>

The daily reference rate has been under scrutiny by China watchers, aiming to discern Beijing's intentions regarding the yuan's direction. <o:p></o:p>

This scrutiny comes as the yuan wobbled close to the lower boundary of its trading range. <o:p></o:p>

Despite the possible benefits a weaker currency could offer to the country's exporters, officials remain vigilant against yuan pressures that could adversely affect local stocks and bonds.<o:p></o:p>

On Wednesday, the offshore yuan concluded trading at a two-week low, influenced by a surge in US inflation that bolstered the dollar and Treasury yields. <o:p></o:p>

According to derivative markets, there are indications that the Federal Reserve might reduce interest rates only twice this year, with the first cut expected in September. <o:p></o:p>

Following the fixing, the offshore yuan saw a modest rise of 0.1 per cent.<o:p></o:p>

The PBOC's emphasis on yuan stability is rooted in the belief that abrupt drops in the yuan could trigger a vicious cycle of capital outflows and further currency devaluation. <o:p></o:p>

As the yuan serves as a stabilising force in the global foreign exchange market and acts as an anchor for regional currencies, heightened yuan volatility could potentially affect other currencies, including the dollar.<o:p></o:p>

(With inputs from Bloomberg)<o:p></o:p>

The People's Bank of China (PBOC) has set a daily reference rate for the yuan at 7.0968 per dollar, a move indicating the country's efforts to support its currency while the dollar gains strength.

The People's Bank of China (PBOC) has set a daily reference rate for the yuan at 7.0968 per dollar, a move indicating the country's efforts to support its currency while the dollar gains strength. According to Bloomberg, this rate was set within the recent trading range, after the offshore yuan experienced its most a major weakening in three weeks. The fixing, set by the PBOC at 9:15 a.m. local time, determines the range within which the yuan can trade, a range limited to 2 per cent. The gap between the set fixing and the market's expectations reached 1597 pips, marking the widest disparity recorded since Bloomberg began its daily survey in 2018. “The strong fix simply underscores policymakers’ desire and will to pursue RMB stability,” Bloomberg quoted Christopher Wong, an FX strategist at Oversea-Chinese Banking Corp, as saying. He further added, “Clearly the fix is outside of consensus estimates, but the strong fix shows that policymakers want to send a strong message to markets.” The daily reference rate has been under scrutiny by China watchers, aiming to discern Beijing's intentions regarding the yuan's direction. This scrutiny comes as the yuan wobbled close to the lower boundary of its trading range. Despite the possible benefits a weaker currency could offer to the country's exporters, officials remain vigilant against yuan pressures that could adversely affect local stocks and bonds. On Wednesday, the offshore yuan concluded trading at a two-week low, influenced by a surge in US inflation that bolstered the dollar and Treasury yields. According to derivative markets, there are indications that the Federal Reserve might reduce interest rates only twice this year, with the first cut expected in September. Following the fixing, the offshore yuan saw a modest rise of 0.1 per cent. The PBOC's emphasis on yuan stability is rooted in the belief that abrupt drops in the yuan could trigger a vicious cycle of capital outflows and further currency devaluation. As the yuan serves as a stabilising force in the global foreign exchange market and acts as an anchor for regional currencies, heightened yuan volatility could potentially affect other currencies, including the dollar. (With inputs from Bloomberg)

China bolsters Yuan Support amidst record fixing gap

The proportion of yuan trading in Russia's foreign exchange market hit a fresh record in march. This reflects the currency's increasing significance to the Russian economy. Watch in for more details!

Yuan trading in Russia hits record

China's major state-owned banks took decisive action on Monday to shore up the yuan, tightening liquidity in the offshore foreign exchange market and actively selling US dollars onshore as domestic equities experienced a significant downturn.<o:p></o:p>

This is based on a Reuters report. <o:p></o:p>

With the benchmark Shanghai Composite index marking its largest one-day drop since April 2022, falling by 2.7 per cent, the move aimed to prevent the yuan from depreciating too rapidly, signalling a clear policy effort to stabilise the currency amid&nbsp;negative market sentiment on equities.<o:p></o:p>

"It is a clear policy signal to stabilise the yuan and counter the negative market sentiment on equities," Reuters quoted Gary Ng, Senior Economist for Asia Pacific at Natixis as saying. The aggressive support measures come at a time when overseas funds have offloaded around $1.6 billion in Chinese equities this year, reflecting waning investor confidence amid signs of an economic slowdown in the world's second-largest economy.<o:p></o:p>

In response to the market dynamics, offshore yuan tomorrow-next forwards surged to a more than two-month high of 4.25 points, indicating a tightening of liquidity conditions. State-owned banks in the offshore market curtailed lending to their peers, further intensifying liquidity constraints and increasing the cost of shorting the currency.<o:p></o:p>

Concurrently, in a bid to prevent swift declines in the yuan, state banks were actively selling dollars in the onshore spot foreign exchange market, with a focus on defending the 7.2 per dollar level.<o:p></o:p>

The sources, speaking on the condition of anonymity due to market regulations, highlighted the crucial role of state banks, which often act on behalf of China's central bank in the foreign exchange market. While their primary mission is to stabilise the yuan, they may also engage in trading on their own behalf or execute clients' orders. The onshore yuan concluded trading at 7.1963 per dollar, reflecting a nearly 1.4 per cent decline year-to-date, while its offshore counterpart settled at 7.2047.<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

China's major state-owned banks took decisive action on Monday to shore up the yuan, tightening liquidity in the offshore foreign exchange market and actively selling US dollars onshore as domestic equities experienced a significant downturn.

China's major state-owned banks took decisive action on Monday to shore up the yuan, tightening liquidity in the offshore foreign exchange market and actively selling US dollars onshore as domestic equities experienced a significant downturn. This is based on a Reuters report. With the benchmark Shanghai Composite index marking its largest one-day drop since April 2022, falling by 2.7 per cent, the move aimed to prevent the yuan from depreciating too rapidly, signalling a clear policy effort to stabilise the currency amid negative market sentiment on equities. "It is a clear policy signal to stabilise the yuan and counter the negative market sentiment on equities," Reuters quoted Gary Ng, Senior Economist for Asia Pacific at Natixis as saying. The aggressive support measures come at a time when overseas funds have offloaded around $1.6 billion in Chinese equities this year, reflecting waning investor confidence amid signs of an economic slowdown in the world's second-largest economy. In response to the market dynamics, offshore yuan tomorrow-next forwards surged to a more than two-month high of 4.25 points, indicating a tightening of liquidity conditions. State-owned banks in the offshore market curtailed lending to their peers, further intensifying liquidity constraints and increasing the cost of shorting the currency. Concurrently, in a bid to prevent swift declines in the yuan, state banks were actively selling dollars in the onshore spot foreign exchange market, with a focus on defending the 7.2 per dollar level. The sources, speaking on the condition of anonymity due to market regulations, highlighted the crucial role of state banks, which often act on behalf of China's central bank in the foreign exchange market. While their primary mission is to stabilise the yuan, they may also engage in trading on their own behalf or execute clients' orders. The onshore yuan concluded trading at 7.1963 per dollar, reflecting a nearly 1.4 per cent decline year-to-date, while its offshore counterpart settled at 7.2047. (With inputs from Reuters)

China's state-owned banks rally to stabilise yuan amid stock market turmoil

China has opted to keep its benchmark lending rates steady during the monthly fixing on Monday, signalling limited room for monetary easing in the face of growing pressure on the yuan. Last week, the People's Bank of China (PBOC) surprised markets by maintaining its medium-term lending facility rate, showcasing a cautious stance. <o:p></o:p>

The central bank's decision, despite recent economic data revealing uneven recovery and deflationary concerns impacting borrowing costs, underscores its reluctance to exacerbate yuan depreciation. Reuters cited Julian Evans-Pritchard from Capital Economics who noted policymakers' "lingering concerns" about the yuan, predicting a cautious approach with a focus on quantitative easing tools.<o:p></o:p>

The one-year loan prime rate (LPR) remains at 3.45 per cent, while the five-year LPR stands unchanged at 4.20 per cent. In a recent Reuters poll involving 27 market watchers, all but one participant anticipated the status quo for both LPRs. The one-year LPR significantly influences most new and existing loans in China, whereas the five-year rate impacts mortgage pricing. <o:p></o:p>

Despite signs of resilience in the US economy, the yuan faced downward pressure at the beginning of the year, weakening by approximately 1.3 per cent year-to-date. Analysts, including Evans-Pritchard, anticipate the PBOC to resume rate cuts once the yuan stabilizes, projecting a 20 basis point reduction by the end of the second quarter.<o:p></o:p>

Last year, the PBOC reduced the one-year LPR twice by a total of 20 basis points, and the five-year LPR saw a 10 basis point decrease. As the Lunar New Year holidays approach, market observers expect the central bank to increase liquidity injections to meet heightened cash demand from corporations and households. <o:p></o:p>

The week-long holiday begins on February 10 this year. Analysts, as reported by the state-owned China Securities Journal, suggest the PBOC may utilise methods such as reverse repos in open market operations, with the possibility of a reduction in banks' reserve requirement ratio (RRR).<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

China has opted to keep its benchmark lending rates steady during the monthly fixing on Monday, signalling limited room for monetary easing in the face of growing pressure on the yuan.

China has opted to keep its benchmark lending rates steady during the monthly fixing on Monday, signalling limited room for monetary easing in the face of growing pressure on the yuan. Last week, the People's Bank of China (PBOC) surprised markets by maintaining its medium-term lending facility rate, showcasing a cautious stance. The central bank's decision, despite recent economic data revealing uneven recovery and deflationary concerns impacting borrowing costs, underscores its reluctance to exacerbate yuan depreciation. Reuters cited Julian Evans-Pritchard from Capital Economics who noted policymakers' "lingering concerns" about the yuan, predicting a cautious approach with a focus on quantitative easing tools. The one-year loan prime rate (LPR) remains at 3.45 per cent, while the five-year LPR stands unchanged at 4.20 per cent. In a recent Reuters poll involving 27 market watchers, all but one participant anticipated the status quo for both LPRs. The one-year LPR significantly influences most new and existing loans in China, whereas the five-year rate impacts mortgage pricing. Despite signs of resilience in the US economy, the yuan faced downward pressure at the beginning of the year, weakening by approximately 1.3 per cent year-to-date. Analysts, including Evans-Pritchard, anticipate the PBOC to resume rate cuts once the yuan stabilizes, projecting a 20 basis point reduction by the end of the second quarter. Last year, the PBOC reduced the one-year LPR twice by a total of 20 basis points, and the five-year LPR saw a 10 basis point decrease. As the Lunar New Year holidays approach, market observers expect the central bank to increase liquidity injections to meet heightened cash demand from corporations and households. The week-long holiday begins on February 10 this year. Analysts, as reported by the state-owned China Securities Journal, suggest the PBOC may utilise methods such as reverse repos in open market operations, with the possibility of a reduction in banks' reserve requirement ratio (RRR). (With inputs from Reuters)

China maintains stability in benchmark lending rates amid yuan pressure

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