China cut interest rates unexpectedly in a move to support the economy

22 July 2024

China cut 1-year loan prime rate by 0.1% to 3.35% and 5-year prime rate by 0.1% to 3.85%. This step was mainly unexpected by the market, however has its reason as the China’s economy is experiencing a number of problems at the moment, such as sluggish growth and weak consumer confidence as a result of property crisis.
The move is negative for the value of CNY as it makes large gap between US and China’s rates even bigger.
Meanwhile, USDCHNY keeps going up to around 7.2945 toady against 7.16 in the beginning of May and 7.09 in the start of the year.