Yuan slides after PBOC, dollar little changed on MLK Day
By Joice Alves and Rae Wee
LONDON/SINGAPORE (Reuters) -The yuan fell on Monday to a one-month low after China's central bank surprised markets by keeping its medium-term policy rate steady, while the dollar was little changed on Martin Luther King (MLK) Jr. Day, a public holiday.
The People's Bank of China (PBOC) left interest rates unchanged when rolling over maturing medium-term policy loans, defying market expectations for a cut to shore up China's bumpy post-pandemic economic recovery.
That sent the onshore yuan sliding to a one-month low of 7.1813 per dollar before recouping some of those losses to trade down 0.08% at 7.1749.
Its offshore counterpart fell as far as 7.1906 per dollar, languishing near Friday's one-month trough.
«China’s central bank kept its medium-term lending facility rate unchanged at 2.5%, contrary to the widespread consensus of a 10 basis points cut,» said Tommy Wo, senior economist at Commerzbank (ETR:CBKG).
However, rate cuts are still on the table, he added.
«The U.S. Fed's pivot has allowed the PBoC to conduct more accommodative monetary policy. There will be more room for PBoC rate cuts when the timing of Fed’s rate reduction becomes clearer».
China's fourth-quarter gross domestic product (GDP), December industrial production, retail sales and unemployment rate are among the key economic indicators out on Wednesday, which are likely to provide further clarity on the outlook for the world's second-largest economy.
The dollar index, measuring the U.S. currency against six peers, was little changed up 0.07% to 102.58, ahead of the U.S. Martin Luther King Day holiday on Monday.
Bets for Fed cuts this year, beginning as early as March, have risen after data on Friday showed U.S. producer
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