As the US Federal Reserve officially kicked off a rate-cutting cycle, China and other Asian economies are likely to see more room to carry out easing policies and boost growth, analysts said.
The US Federal Reserve announced a cut of its benchmark borrowing rate by half a percentage point on Wednesday, brining its range to between 4.75 and 5 per cent, according to the Federal Open Market Committee, “in light of the progress on inflation and the balance of risks”.
“The Federal Reserve’s interest rate reduction cycle is expected to further alleviate the outflow pressure faced by the yuan due to interest rate differentials, and open up room for the domestic monetary policy adjustment,” Huatai Securities said on Thursday.
Following the announcement by the US Federal Reserve, the People’s Bank of China on Thursday set the daily fixing for the yuan at 7.0983 per US dollar, compared with 7.0870 a day earlier.
The onshore yuan spot rate weakened to 7.1040 per US dollar in early morning trading on Thursday, compared to Wednesday’s close of 7.0893.