USD/CNY: Policy support and stable fix – Commerzbank
Commerzbank’s Charlie Lay and Henry Hao note that the People's Bank of China (PBoC) kept benchmark lending rates at record lows for an 11th straight month, with the one-year LPR at 3.0% and five-year at 3.5%. Strong 5% year-on-year Q1 Gross Domestic Product (GDP) growth has reduced pressure for broad rate cuts, while USD/CNY and USD/CNH remain near their strongest levels since early 2023.
PBoC holds LPR as growth supports
"The People's Bank of China (PBoC) kept its benchmark lending rates unchanged at record lows for the 11th consecutive month in April. Matching market expectations, the central bank held the one-year loan prime rate (LPR) at 3.0% and the mortgage-linked five-year LPR at 3.5%."
"This decision to stand pat follows the stronger-than-expected first quarter GDP expansion of 5% yoy."
"With the economy expanding at the upper end of Beijing's 4.5% to 5% annual growth target, the PBoC has the flexibility to pause and assess the ongoing recovery trajectory."
"Moving forward, the central bank has committed to maintaining a supportive and moderately loose policy stance to shore up domestic activity while preserving currency stability."
"In FX, USD/CNY and USD/CNH were flat at around 6.82 yesterday, remaining near their strongest levels since early 2023."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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