FX.co ★ Offshore Yuan Hits 2-Week Low

The offshore yuan slipped slightly to approximately 7.26 against the US dollar, marking its lowest point in two weeks due to the continued strength of the dollar. This appreciation of the dollar was influenced by Federal Reserve Chair Powell's comments reiterating that there is no urgency to reduce interest rates. Furthermore, market sentiment was affected by the looming April 2 deadline set by former President Trump for reciprocal tariffs. Nonetheless, Trump suggested possible 'flexibility' in the implementation of these tariffs, raising expectations for a more focused strategy. Additionally, the yuan faced downward pressure as the People’s Bank of China (PBOC) reduced its support via daily midpoint fixings, indicating a desire to manage the yuan's depreciation against the dollar. Regarding monetary policy, the PBOC maintained its key lending rates steady for the fifth consecutive month in March, with the one-year Loan Prime Rate (LPR) at 3.1% and the five-year LPR at 3.6%, both at historic lows. Despite this, the central bank indicated its readiness to lower interest rates and modify the reserve requirement ratio for banks when deemed appropriate.