FX.co ★ Offshore Yuan Extends Gains

The offshore yuan climbed to approximately 7.19 per dollar on Thursday, continuing its upward trajectory from the previous session as the US dollar weakened. This decline in the dollar was prompted by mounting concerns regarding the United States' deteriorating fiscal situation. Investor wariness has been heightened by President Trump's proposed budget, which outlines substantial tax reductions that could drastically increase the national debt. Further strain on the dollar resulted from an underwhelming 20-year bond auction, underscoring diminished interest in US assets. Meanwhile, in China, the People's Bank of China opted to lower its key lending rates for the first time in seven months at its May 2025 meeting. This move was designed to invigorate economic growth and mitigate the adverse effects of growing trade tensions. The central bank cut the one-year loan prime rate (LPR) by 10 basis points to 3%, and the five-year LPR by the same margin to 3.5%. These reductions, which had been largely anticipated, set new historic lows for both rates and followed a series of earlier comprehensive easing measures implemented this month.