China Economy Propels Yuan Higher After Central Bank Actions
The Chinese yuan jumped to its highest level in over a year after powerful policy moves from the People's Bank of China (PBOC) and a recent interest rate cut from the US Federal Reserve. The offshore yuan surged past the 7 per US dollar threshold, marking a significant recovery.
Following a set of major changes by the PBOC, which included a 0.2 percentage point cut to the benchmark policy rate and a 0.5 percentage point reduction in the reserve requirement ratio, the yuan gained momentum. Analysts are attributing this rally primarily to improved market expectations regarding China’s economic fundamentals.
Standard Chartered’s chief economist for Greater China, Ding Shuang, noted that the PBOC’s measures exceeded expectations and instilled confidence in the market for economic support. He anticipates that the yuan will remain under upward pressure due to the Federal Reserve’s pace of rate cuts and demand for foreign exchange.
PBOC governor Pan Gongsheng mentioned the reduced depreciation pressure on the yuan as a foundation for stability. He warned against forming unilateral expectations in the foreign exchange market which might lead to undue volatility.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.