The offshore yuan traded around 6.77 per dollar on Monday, hovering near a one-week low as investors weighed escalating tensions in the Middle East and the People's Bank of China’s decision to keep key lending rates unchanged. Market sentiment remained fragile after the US carried out new airstrikes against Iran over the weekend, prompting Tehran to declare its ceasefire with Washington no longer in effect.
On the policy front, the People’s Bank of China left its benchmark lending rates at record lows for a 14th straight month in July, holding the one-year loan prime rate (LPR) at 3.0% and the five-year LPR at 3.5%. The decision came despite weaker-than-expected second-quarter data that highlighted the uneven nature of China’s recovery: strong manufacturing output and exports continued to lend support, while subdued consumer spending remained a drag on growth. Investors are now turning their attention to the upcoming Politburo meeting later this month for guidance on potential stimulus measures.
