China’s yuan: central bank sees resolve for stable currency, stimulus tested as Fed holds firm on rates

Name: US Federal Reserve authorises another big rate hike in bid to curb inflation
Uploaded: 2024-04-04T22:00:27.000Z
Duration: 1 min 36 s
Description: US Federal Reserve authorises another big rate hike in bid to curb inflation

The People’s Bank of China has expressed an interest in more rounds of monetary easing, but pressures on the yuan could stall those actions

With no clear date set for Federal Reserve cuts, depreciation of the yuan against the US dollar remains the major priority for China’s central bank

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China’s central bank has expressed an interest in further easing policies, but pressures on the yuan may complicate those plans. Photo: AP

Amanda Lee

Published: 6:00am, 5 Apr 2024Updated: 9:10am, 5 Apr 2024

Although China’s central bank has hinted at plans for more monetary easing, uncertainty over the exact timing of US interest rate cuts and renewed depreciation pressures on the yuan are likely to delay any moves in that vein, analysts said.

Stress has piled on the yuan as the US Federal Reserve holds interest rates steady following a two-day policy meeting that ended on March 20.

At least one reduction in rates is widely anticipated for this year after months of increase and maintenance, and officials have suggested as many as three could be on the agenda.

The yuan has plunged an average of 0.53 per cent against the US dollar since March 20, despite strong fixing rates being set by the People’s Bank of China (PBOC) for the national currency.

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US Federal Reserve authorises another big rate hike in bid to curb inflation

Louise Loo, China economist at Oxford Economics, said that the PBOC is still in a relatively “accommodative” mode when it comes to yuan exchange rate management.