FX.co ★ Yuan Steadies as PBOC Holds Rates

The offshore yuan maintained its position at approximately 6.96 per dollar on Tuesday, marking its proximity to a 32-month peak. This stability followed the People's Bank of China's decision to keep lending rates unchanged, reflecting a preference for targeted economic support rather than wide-ranging monetary easing. Specifically, the central bank retained the one-year and five-year loan prime rates at 3.0% and 3.5%, respectively, continuing an eight-month trend of maintaining policy stability. This move underscores Beijing's strategy to implement selective stimulus measures in response to a slowdown in economic momentum, notably affected by slumping household spending and a struggling property sector. Instead of reducing benchmark rates, the focus has been on targeted assistance for private enterprises, small businesses, and technological investments. Concurrently, the yuan's strength relative to the dollar has alleviated some of the pressure on policymakers, allowing a focus on maintaining currency stability. Meanwhile, the dollar experienced downward pressure following the White House's confrontational stance towards the European Union regarding Greenland's future, unsettling global markets.