As foreseen by experts, People’s Bank of China (PBOC) maintained its Loan Prime Rates (LPR) for one year intact at around 3.85%. The LPR for five-year loans was also maintained at the expected rate of 4.65%. China is maintaining this interest rate for the 15th consecutive month. Experts view this as a sign of China’s economy recovering from the corona shocks.
This decision did not have much impact on the market, even though China’s short-term interest rates are an important influencing factor in currency evaluation. A small change that can be attributed to this Interest Rate Decision is regarding the USD/AUD price. Having witnessed the PBOC Interest Rate Decision, the AUD/USD bounced from its previous level of 0.7332, but could not withstand the pressure from the bears amidst the pandemic woes.
Also, as part of maintaining strict control over the Chinese Yuan, the PBOC fixed the Chinese Yuan reference rate at 6.4855 compared to the previous reference rate of 6.4700 and close rate of 6.4905.