Business
Why the stronger yuan could prompt the People’s Bank of China to cut rates
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An article via Reuters in brief:
- China doesn’t appear ready to cut rates, given surprisingly strong first quarter growth data
- China appears reluctant to cut rates before the Fed
- The yuan has been rising steadily since mid-March, its trade-weighted index hitting its highest level since October 2022, but it is simply not rising against a very strong dollar.
Reuters concludes:
- If Beijing can come to terms with the strong U.S. dollar, it could ease monetary policy to prioritize economic support.
- The yuan could even emerge stronger following 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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