Yuan is rising on the unchanged interest rates

On Tuesday, the Chinese yuan rose against the U.S. dollar after declining initially. As it was expected, the credit rates of the People's Bank of China (PBOC) remained unchanged.

The loan prime rates (LPR) of the PBOC are not changing for the fourth month in a row. The bank maintained the base annual loan rate at 3.65% and the five-year LPR at 4.30%.

Tommy Wu, a senior economist at Commerzbank, said that it is probable that the PBOC will decrease LPRs in the coming months, especially the five-year LPR to support the real estate and long-term loans for businesses. Nevertheless, according to him, the monetary stimulus will still be aimed to avoid re-leveraging.

Over the last month, the growth of the yuan against the U.S. dollar totaled 1.6%. Goldman Sachs reports that further strengthening of the currency will likely depend on the timing and size of the actual recovery in economic activity. They expect the USDCNY to strengthen slightly to 6.90 within 12 months.