{"id":2006568,"date":"2023-08-20T23:51:02","date_gmt":"2023-08-21T03:51:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-surprises-with-modest-rate-cut-amid-growing-yuan-risks\/"},"modified":"2023-08-20T23:56:46","modified_gmt":"2023-08-21T03:56:46","slug":"china-surprises-with-modest-rate-cut-amid-growing-yuan-risks","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-surprises-with-modest-rate-cut-amid-growing-yuan-risks\/","title":{"rendered":"China surprises with modest rate cut amid growing yuan risks"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">20<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fchina-surprises-with-modest-rate-cut-amid-growing-yuan-risks%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2006568&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div class=\"entry-content\">\n<p><strong>China Cuts Benchmark Lending\u2062 Rate to\u2063 Stimulate Credit Demand<\/strong><\/p>\n<p>The recovery in China&#8217;s economy has lost steam due to a worsening property slump, \u200dweak\u2063 consumer \u200cspending, and tumbling credit growth. To address these concerns, \u2063China has cut its\u200c one-year benchmark lending rate on Monday.\u200c However, the surprise move\u2062 was keeping\u2063 the five-year rate unchanged, which raised concerns about the rapidly weakening \u200ccurrency.<\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\" style=\"min-width: 320px; min-height: 50px;  text-align: center;\">  \t<script>  \t\tgoogletag.cmd.push(function() { googletag.display('div-gpt-ad-1663871513696-art-1'); });  \t<\/script>  <\/div>\n<div class=\"ad-slot__ad-label\">Advertisement<\/div>\n<\/p>\n<p>Analysts believe that the downward pressure on the yuan limits China&#8217;s ability to implement deeper monetary\u2063 easing.\u200b A\u200c further widening of China&#8217;s yield \u200cdifferentials\u2063 with other major economies could trigger yuan \u2064selloffs and capital flight.<\/p>\n<p>The one<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/euro-back-below-parity-vs-dollar-again-gas-crisis-weighs\/\" title=\"Euro back below parity vs dollar again, gas crisis weighs\">-year loan prime rate<\/a> (LPR) has been lowered\u2062 by \u206410 basis points to 3.45% from 3.55% \u2062previously, while \u2063the five-year LPR\u2063 remains at 4.20%.<\/p>\n<p>In a\u200c Reuters \u200dpoll of 35 market watchers, all participants predicted\u200b cuts \u2064to both\u200d rates. However, the 10 basis point cut in the one-year rate was smaller than the expected\u200b 15 \u2062basis point cut.<\/p>\n<p>\u201cProbably China limited the size and scope of rate cuts because they are \u2063concerned \u200babout downward pressure on the yuan,\u201d said Masayuki Kichikawa, chief macro\u200c strategist at \u200cSumitomo Mitsui DS Asset\u200b Management.<\/p>\n<p>\u201cChinese authorities \u2064care about currency market stability.\u201d<\/p>\n<p>Most \u2063new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences \u200cthe pricing \u2062of mortgages. \u2062China cut both LPRs\u2064 in June to boost the economy.<\/p>\n<p>The onshore yuan eased in \u2063early trade to 7.3078\u200c per dollar, compared \u200bwith the previous \u200dclose of 7.2855, while benchmark\u200c Shanghai Composite index and the blue-chip\u2062 CSI 300\u2064 index also declined.<\/p>\n<p>The yuan \u2064has lost nearly 6% against the dollar so far this year, making it\u200d one\u2064 of the\u200d worst \u2063performing Asian currencies.<\/p>\n<p>The reduction in the one-year\u200b LPR comes after the People&#8217;s Bank of China (PBOC) unexpectedly lowered its <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-leaves-lending-benchmarks-unchanged-amid-global-rates-squeeze\/\" title=\"China leaves lending benchmarks unchanged amid global rates squeeze\">medium-term policy rate<\/a> last week.<\/p>\n<p>The medium-term \u200blending facility (MLF) rate \u200cserves as a guide to the LPR and is widely read\u2063 by markets as a precursor to future \u200dchanges to the \u200blending benchmarks.<\/p>\n<p>China&#8217;s central bank \u200chas \u2062also pledged to keep \u200dliquidity reasonably ample and its policy &#8220;precise\u2063 and forceful&#8221; \u2062to\u200c support the economic recovery, \u200damid rising \u2063headwinds, according to its second-quarter monetary policy implementation \u2064report.<\/p>\n<p>However, the steady\u200d five-year tenor caught \u2063many traders and analysts off guard. Some expected \u2064deeper \u2063cuts to the benchmarks due to the\u200b troubled property \u200csector and rising \u2064default risks at some \u2062developers.<\/p>\n<p>\u201cWe interpret the status quo of the five-year LPR as a signal that the Chinese banks are reluctant \u200cto cut\u200d rates at the expense of rate differential margin,\u201d said \u200bKen Cheung, chief Asian FX strategist \u200dat Mizuho Bank.<\/p>\n<p>\u201cIt flagged a problem \u200con the effectiveness of PBOC&#8217;s policy guidance pass-through into the market, and the Chinese authorities \u200cmay be lacking \u200beffective tools to stimulate the property sector \u2063and economy via monetary\u200d easing.\u201d<\/p>\n<p>Cheung added that the unexpected rate outcome should be\u2064 &#8220;negative to China&#8217;s growth outlook and the yuan exchange rate.&#8221;<\/p>\n<p>The central bank stated that it will\u2064 optimize credit policies for the property sector and coordinate financial \u200dsupport to <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-surprises-with-modest-rate-cut-amid-growing-yuan-risks\/\" title=\"China unexpectedly cuts interest rates to mitigate increasing risks to the yuan.\">resolve local government debt problems<\/a>, according to a\u2063 statement on Sunday.<\/p>\n<p>  (Reporting by Winni Zhou\u2062 and\u2062 Tom WestbrookAdditional reporting by \u2062Kevin BucklandEditing by Sam Holmes)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/china-surprises-with-modest\/attachment\/file-photo-paramilitary-police-officers-stand-guard-in-front-of-2\/\"><\/a><\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>In Golden, Colorado, on\u200b International\u200d Homeless Animal Day, \u200cPOSO Dog Rescue is\u2063 <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/athletics-halaszs-hammer-gets-home-fans-roaring\/\" title=\"Halasz's hammer excites home fans.\">honoring shelter dogs<\/a> who were once on the kill \u2062list. <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>This \u2063week has \u200bbeen filled with major\u2063 headlines in the\u2063 U.S. One America\u2019s Rachel Acenas has more. <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>Trump picks Tucker \u2062over Fox,\u200b Elon blocks the block button, and \u2062Rich Men North of Richmond\u200d continues to \u200cdominate<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>One America\u2019s Jessamyn\u200b Dodd\u200d sits down with California Senate candidate Eric Early \u200cto discuss the \u200brising crime in the state.<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>By Ju-min \u200cPark SEOUL (Reuters) \u2013 Suspected North Korean hackers have targeted a joint U.S.-South Korea military exercise being held\u200c this week\u2026 <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>By Ju-min \u2063Park SEOUL (Reuters) \u2013 Suspected North Korean hackers have targeted a joint U.S.-South Korea military\u200b exercise being held \u200bthis week\u2026 <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>SAN FRANCISCO (Reuters) -California\u2019s autos regulator \u200csaid\u200d on Friday it is investigating \u201crecent concerning\u200c incidents\u201d involving autonomous vehicles\u200d operated by\u2062 General \u200dMotors\u2026 <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>By Valerie Insinna and \u2062Tim Hepher WASHINGTON\u2063 (Reuters) \u2013 JetZero, which\u2063 has won U.S. Air Force backing to build a\u200d demonstrator for\u2026 <\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>SHANGHAI\/SINGAPORE (Reuters) -China cut its one-year benchmark lending rate on Monday as authorities seek to ramp up efforts to stimulate credit demand, but surprised markets by keeping the five-year rate unchanged amid broader concerns about a rapidly weakening currency. The recovery in the world\u2019s second-largest economy has lost steam due to a worsening property slump<\/p>\n","protected":false},"author":66,"featured_media":2006569,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[542],"tags":[],"class_list":["post-2006568","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oann"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2006568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2006568"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2006568\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2006569"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2006568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2006568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2006568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}