In a bid to shield the yuan from fluctuations and address the challenges faced by policymakers in managing economic risks and pressures arising from contraction, the People’s Bank of China decided to maintain its key interest rate unchanged.
The central bank of China opted to keep the interest rate on its policy loans steady for one year at 2.5% on Sunday, injecting a small amount of liquidity into the financial system.
These actions align with the expectations of most economists surveyed by Bloomberg.
On the other hand, efforts are being made to avoid a depreciation of the yuan amidst policy differences with the United States.
Speculation on Federal Reserve interest rate cuts is being retracted due to ongoing inflation. While a weaker currency may provide a boost for exporters, it also poses a risk of capital flight.
This move comes after the yuan fell to its lowest level in three months in external trading last week amid a strengthening dollar.
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