The People’s Bank of China left rates unchanged today:
Unchanged now for the 9th month in a row.
- Recap of what’s happening with China’s economy:
- weakening yuan
- widening yield differentials with the US
- recent data shows a faltering economy after the initial post-COVID bounce
- capital outflow risks could exacerbate a fall in the yuan
GS says:
- “Despite the April weakness, we do not expect policymakers to unleash major stimulus as the 5% GDP growth target is still well within reach and issues such as property risks and youth unemployment require a more targeted approach,”
- “Within monetary policy, symbolic measures such as a reserve requirement ratio (RRR) cut are more likely than policy rate cuts this year given the already wide U.S.-China interest rate differential and RMB depreciation pressure.”
GS remarks are via Reuters.
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Yuna has rallied after Friday’s intervention, repeating from earlier today:
And this:
- People’s Bank of China and the foreign exchange regulator will “strengthen market expectation guidance and take actions to correct pro-cyclical and one-way market behaviors when necessary,” according to a statement Friday.
Offshore yuan update: