Why the stronger yuan might prompt a PBOC rate cut

A piece via Reuters in brief:China does not appear ready cut rates, given unexpectedly strong Q1 growth dataChina appears reluctant to cut rates ahead of the FedYuan has been rising steadily since mid-March, its trade-weighted index has hit its highest since October 2022, its just not rising against a very strong USDReuters concludes:If Beijing can accept the US dollar strength it could ease monetary policy to prioritise economic support.The yuan might even emerge stronger on the ensuing rally in Chinese risk assets. CNY CFETS index (Reuters chart): This article was written by Eamonn Sheridan at www.forexlive.com.

Apr 24, 2024 - 09:45
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Why the stronger yuan might prompt a PBOC rate cut

A piece via Reuters in brief:

  • China does not appear ready cut rates, given unexpectedly strong Q1 growth data
  • China appears reluctant to cut rates ahead of the Fed
  • Yuan has been rising steadily since mid-March, its trade-weighted index has hit its highest since October 2022, its just not rising against a very strong USD

Reuters concludes:

  • If Beijing can accept the US dollar strength it could ease monetary policy to prioritise economic support.
  • The yuan might even emerge stronger on the ensuing rally in Chinese risk assets.

CNY CFETS index (Reuters chart): This article was written by Eamonn Sheridan at www.forexlive.com.

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