USD/CNH Extends Gains Above 7.2900 As PBOC Unexpectedly Cuts Rates

USD/CNH rose for the third day in a row, trading around 7.2935 in Asia on Monday. The currency pair gained after the People’s Bank of China unexpectedly cut interest rates.

Earlier on Monday, the People’s Bank of China announced a 10 basis point cut in the one-year loan prime rate (LPR) – the benchmark rate banks use to lend to customers – to 3.35% from 3.45%, and a reduction in the five-year loan prime rate from 3.95% to 3.85%. In addition, the People’s Bank of China cut its key short-term policy rates for the first time since August 2023. The 7-day reverse repo rate was cut from 1.8% to 1.7%.

On the other hand, the prospect of a rate cut by the Federal Reserve could weaken the dollar and limit the upside for the currency pair. New York Fed President Williams said on Friday that a rate cut may be needed in the coming months, but not at the July meeting.

Meanwhile, Federal Reserve Governor Christopher Waller said inflation will continue to fall back toward the Fed’s 2% target in the coming months, adding that the time to lower the policy rate is getting closer. Investors are currently pricing in less than 5% odds of the Fed taking action at its July meeting and pricing in nearly 100% odds of a rate cut in September, according to the CME FedWatch tool.

CNY latest articles

Popular exchange rates

foreign exchange

fxcurrencyconverter is a forex portal. The main columns are exchange rate, knowledge, news, currency and so on.

© 2023 Copyright fxcurrencyconverter.com