Chinese Yuan Steadies as PBoC Prioritises Currency Stability
Markets analysis on behalf of Joseph Dahrieh, Managing Principal at Tickmill
The Chinese yuan has remained relatively stable, supported by the People’s Bank of China (PBoC) policy and a steady 10-year government bond yield near 1.66%. On Monday, the central bank kept the one-year and five-year loan prime rates (LPR) unchanged at 3.1% and 3.6%, respectively, marking the sixth consecutive month without adjustment. The policy could help keep the yuan more stable amid current trade concerns.
Despite ongoing deflationary pressures, as reflected in March’s declines in both consumer and producer prices, the PBoC could have a preference for maintaining its current stance in the near term to support the currency. In this regard, further policy adjustments may be deferred until there is greater clarity on external developments, particularly regarding monetary policy shifts in the U.S. Markets could turn to upcoming economic data and monitor new developments in US trade policy. The latter could affect the direction of the Chinese currency.
