China's yuan falls after the central bank cuts rates for the 2nd time in as many weeks to revive the economy
Wang Zhao/AFP/Getty Images
- The Chinese yuan fell Monday as Beijing initiated a second interest rate hike in two weeks.
- The yuan sunk to a two year low on the news.
- China is taking strong action to reactivate credit activity and investment in the country.
China's yuan ticked down to a two-year low Monday, following a second consecutive interest rate cut by authorities in Beijing in two weeks.
The yuan was changing hands at 6.86 against the dollar, as Beijing aggressively tries to reinvigorate its credit sector following a pandemic-related slump that has turned markets sour. The People's Bank of China slashed its benchmark five-year loan prime rate to 4.30% from 4.45% in a small incremental change. The increases follow a previous 10 basis-point rate hike last week of China's one-year medium-term lending facility loans.
Analysts speaking to CNBC say that while the latest rate cut in China is encouraging, a more impactful move would be for the country to loosen stringent Covid-19 regulations meant to enforce Beijing's "Zero-Covid" policy. Chinese markets have remained subdued as the country recovers from the pandemic.
China has been slower to aggressively tackle inflation, and instead has eased policy in contrast to sharp rate hikes from the US Federal Reserve and other central banks. China's last three benchmark rate increases are the country's strongest moves yet to move forward from the Covid-19 pandemic's battering of its economy.
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