PBoC is likely to target stability rather than a weaker CNY

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PBoC is likely to target stability rather than a weaker CNY
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USD/CNY is holding steady around the 7.30 level and has been range bound between 7.24-7.36 for the past two months. Economists at Commerzbank analyze

the pair’s outlook. PBoC is likely to ensure ample liquidity in the system The bottom appears to be continued policy support from all levers, namely fiscal and monetary policy. PBoC left the 1-year medium-term lending facility rate unchanged in October at 2.50%.

It was last cut by 15 bps in August 2023. We may not necessarily see further cuts as it will widen the interest rate differential vs USD and exert downside pressure on CNY. However, PBoC is likely to ensure ample liquidity in the system. For USD/CNY, this may entail a continued supportive tone. .

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