USD/CNY rose to 7.2145 yesterday from 7.1160 at the end of September. Economists at Commerzbank do not expect the People’s Bank of China (PBoC) to cut its policy rates amid the current yen weakness.
Currency pressure keeps interest rates in check
“We think the PBoC may still guide banks to lower their loan prime rate (LPR) in the coming months. In particular, further cuts in the 5-year rate will effectively reduce mortgage rates as a mean to support the battered housing market.”
“However, we continue to think that the central bank will unlikely cut its policy rates any time soon, particularly the medium-term lending facility (MLF) rate. This is because it will further widen the US-China yield spread and add further pressure on the CNY.”
See: Chinese yuan to suffer further sustained weakness – Credit Suisse
