Chinese Yuan: PBoC keeps yuan broadly stable – Societe Generale
Societe Generale describes a limited impact from President Xi’s US visit, with no new tariff cuts or AI dialogue mechanism agreed as the trade truce was only extended to January.
The People's Bank of China (PBoC) maintained the yuan's relatively stable position during President Xi's US visit, according to Societe Generale. The trade truce between China and the US, which was extended until January, did not result in new tariff reductions or an agreement on an AI dialogue mechanism. The US dollar against the Chinese yuan (USD/CNY) recovered after briefly falling below 6.70, driven by higher US Treasury yields and a slight easing of PBoC controls.
The central bank reiterated its moderate stance and commitment to yuan stability, signaling a potential adjustment of policy tools as needed. Chinese banks kept their 1-year and 5-year prime rates at 3.0% and 3.5%, respectively. The PBoC increased liquidity support by raising the daily reverse repo cap to CNY1tn and injecting a net CNY200bn through MLF operations.
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