The Chinese yuan was trading relatively stable on Monday morning in the onshore spot market, mainly on speculation the central bank would not resort to a weaker currency to shore up the economy after its third interest rate cut in six months on Sunday. Traders reacted positively after the People’s Bank of China (PBOC) set its benchmark midpoint rate at a stronger level at 9:15am, raising it by 15 basis points, or 0.02 per cent to 6.1132. Traders are allowed to trade the spot yuan at 2 per cent above or below the midpoint rate. The onshore yuan weakened 0.01 per cent, or 8 pips, to 6.2091 as of noon on Monday, while the offshore yuan weakened 0.09 per cent, or 57 pips, to stand at 6.3666. The onshore yuan is at its weakest level in two weeks. “Usually after a stronger dollar overnight, the Renminbi fixing would weaken a bit. Yet this morning the authorities strengthened the CNY in the fixing, sending a positive signal,” said Eddie Cheung, foreign exchange strategist at the Standard Chartered Bank, who expects the currency to close the second quarter at 6.24 to the dollar. The yuan forwards are still pricing more depreciation risks, on expectations that the currency would trade at 6.3666 some 12 months from now. The PBoC announced a 25 basis points cut to both the benchmark lending rate and deposit rate on Sunday, in light of the recent economic slowdown and rising deflationary pressures in the country.