The CNH rallied overnight on the back of JPY strength, BBH FX strategists note.
Seven-day repo rate to be PBOC’s new policy benchmark
“The CNH rallied overnight on the back of JPY strength. The People’s Bank of China (PBOC) cut the medium-term lending facility by 20 bps to 2.30%, the biggest cut since April 2020.”
“The move follows Monday’s unexpected 10 bp cut in the seven-day reverse repo rate to 1.70%. The seven-day repo rate is expected to be the PBOC’s new policy benchmark as it is closer to market rates.”
“The PBOC is trying to shore up weak Chinese economic activity. However, until China addresses its massive debt burden (total debt is more than 300% of GDP), the country looks headed for weaker growth in the coming years.”
Source: Fx Street
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