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Business Recorder
21-05-2025
- Business
- Business Recorder
China's yuan edges up on latest economic stimulus measures
HONG KONG: China's yuan rose against the dollar on Wednesday, extending gains as the latest efforts by Beijing to stimulate a shaky economy was further underpinned by a broadly softer US currency. China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered deposit rates as authorities take steps to buffer the economy from the impact of the Sino-US trade war. People's Bank of China Governor Pan Gongsheng also vowed to implement 'appropriately lose' monetary policy to support key areas including technological innovation, consumption, private small businesses, and stabilizing foreign trade. By 03:07 GMT, the yuan was 0.11% higher at 7.2085 to the dollar after trading in a range of 7.2075 to 7.2200. The offshore yuan traded at 7.207 yuan per dollar, up about 0.11% in Asian trade. 'The yuan will likely outperform the dollar in the short term as market sentiment improves' on policy support and following this month's agreement between China and the United States to pause their trade war, analysts at Nanhua Futures said in a note on Wednesday. Prior to the market opening, the PBOC set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1937 per dollar, 196 pips firmer than a Reuters' estimate. China's yuan slips as investors wary ahead of Sino-US trade talks Based on the official guidance, the yuan is allowed to drop as far as 7.3376. The dollar's six-currency index edged lower to 99.68, extending a two-day slide against major peers, as President Donald Trump failed to convince Republican holdouts to back his sweeping tax bill. Traders were also wary of US officials potentially angling for a weaker dollar at Group of Seven finance minister meetings currently underway in Canada.
Mint
20-05-2025
- Business
- Mint
China cuts benchmark interest rates for the first time in seven months to aid growth; PBOC cuts LPR by 10 bps to 3%
China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered deposit rates as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-U.S. trade war. The widely expected rate cuts are aimed at stimulating consumption and loan growth as the world's No. 2 economy softens, while still protecting commercial lenders' shrinking profit margins. Still, the size of the rate reductions was mild and reflected the incremental pace of monetary easing in recent years and what analysts interpreted as some wariness among policymakers for more aggressive steps while they navigate the trade war with the United States. The People's Bank of China said the one-year loan prime rate (LPR), a benchmark determined by banks, had been lowered by 10 basis points to 3.0%, while the five-year LPR was reduced by the same margin to 3.5%. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. Both rates are now at the lowest level since China ravamped the LPR mechanism in 2019. The lending rate cut was announced just after five of China's biggest state-owned banks said they had trimmed their deposit interest rates. Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China reduced deposit rates by 5-25 basis points (bps) for some tenors, according to rates shown on the banks' mobile apps. Reuters had reported on Monday that the banks planned to cut their deposit rates from Tuesday. The deposit rate reductions should guide smaller lenders in making similar cuts. Banking shares edged higher following the rate decision, with the CSI Bank Index rising 0.3%. The rate cuts are part of a package of measures announced by PBOC Governor Pan Gongsheng and other financial regulators before talks between China and the U.S. in Geneva earlier this month that led to a de-escalation in their trade war. Global investment banks are raising their forecasts for China's economic growth this year, after Beijing and Washington agreed to a 90-day pause on tariffs, despite uncertainty around Sino-U.S. trade negotiations. China's new home prices were unchanged in April from a month earlier, official data showed on Monday, extending the no-growth trend to nearly two years despite policymakers' efforts to stabilise the sector. Meanwhile, new bank loans also tumbled more than expected last month. Major Chinese banks cut deposit rates in October and July last year as their profits came under pressure after the PBOC lowered lending rates. Prior to that, the banks made three rounds of such deposit rate cuts in 2023. The Big Five lenders reported narrower margins on their first-quarter earnings and some a drop in profits as the banking sector is hit by a protracted economic slowdown. Commercial banks' net interest margin - a key profitability measure - dropped to a record low 1.43% in the first quarter of this year, official data showed. Net interest margins are expected to fall a further 10-15 bps this year as banks are in fierce competition to lure customers with cheap loans while credit demand remains weak, analysts at China International Capital Corp said in a note.
South China Morning Post
20-05-2025
- Business
- South China Morning Post
China cuts key mortgage rate to spur property market. Is a rebound in sight?
China slashed a key reference rate for mortgage loans by 10 basis points on Tuesday amid efforts to stabilise the property market, but analysts said the moderate cut was still insufficient to revive a sector mired in a downturn. The five-year loan prime rate (LPR), which commercial banks use as a benchmark for their mortgage rates, was lowered from 3.6 per cent to 3.5 per cent, according to the People's Bank of China. The one-year loan prime rate, the reference rate for corporate loans, was also cut by 0.1 percentage points to 3.0 per cent. The reduction followed the central bank's announcement earlier this month to cut the seven-day reverse repo rate – a benchmark interest rate – by 10 basis points to 1.4 per cent, which central bank governor Pan Gongsheng said would likely lead to a similar drop in the mortgage reference rate. The first cut since October came amid Beijing's broader efforts to revive China's property market, which has been a long-standing drag on the economy after solvency issues emerged among several major real estate developers. Beijing has placed particular emphasis on the sector this year while seeking to boost domestic demand and ensure economic stability amid heightened external risks under Donald Trump's second presidency.
Business Recorder
20-05-2025
- Business
- Business Recorder
China cuts key rates to aid economy as trade war simmers
BEIJING: China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered deposit rates as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-U.S. trade war. The widely expected rate cuts are aimed at stimulating consumption and loan growth in a weakening economy while still protecting commercial lenders' shrinking profit margins. The People's Bank of China said the one-year loan prime rate (LPR), a benchmark determined by banks, had been lowered by 10 basis points to 3.0% , while the five-year LPR was reduced by the same margin to 3.5%. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. The lending rate cut was announced just after five of China's biggest state-owned banks said they have trimmed their deposit interest rates. Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of Chinareduced deposit rates by 5-25 basis points (bps) for some tenors, according to rates shown on the banks' mobile apps. The banks cut interest rates on time deposits by 5 bps to 0.05%, reduced rates on one-year time deposits by 15 bps to 0.95% and shaved off 25 bps on three-year and five-year time deposits. These deposit rate reductions should guide smaller lenders in making similar cuts. Reuters reported on Monday that China's major state banks plan to cut their deposit rates from Tuesday, citing sources. The rate cuts are part of a package of measures announced by PBOC Governor Pan Gongsheng and other financial regulators before talks between China and the U.S. in Geneva earlier this month that led to a de-escalation in their trade war. China's central bank to spur financing support for consumption, trade Global investment banks are raising their forecasts for China's economic growth this year, after Beijing and Washington agreed to a 90-day pause on tariffs, despite uncertainty around Sino-U.S. trade negotiations. 'We still believe it will be quite challenging for Beijing to achieve its 'around 5%' growth target unless it rolls out a sizable stimulus package,' Ting Lu, chief China economist at Nomura, said in a note this week. 'Considering the respite on the trade war, Beijing might be under less pressure to introduce the necessary stimulus and reforms.' Recent economic readings show growth remains patchy and lacklustre. China's new home prices were unchanged in April from a month earlier, official data showed on Monday, extending the no-growth trend to nearly two years despite policymakers' efforts to stabilise the sector. Meanwhile, new bank loans also tumbled more than expected last month.
Time of India
14-05-2025
- Business
- Time of India
Tariffs ate 61% of fresh loans in China in April
China's new loans slumped sharply and credit expanded at a slower pace than expected in April, as escalating trade tensions with the US harmed sentiment. Financial institutions offered ¥285 billion ($40 billion) of new loans in the month, a drop of 61% from a year earlier to the lowest level since July, according to Bloomberg calculations based on data released by the People's Bank of China on Wednesday. The median forecast of economists surveyed was Yuan 700 billion . 5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by Aggregate financing, a broad measure of credit, increased Yuan 1.2 trillion in April, also worse than the Yuan 1.4 trillion estimated by economists. The US hiked tariffs on China drastically throughout April before the two countries negotiated a truce this week that led to the temporary lifting of triple-digit levies. The willingness of companies in China to expand investment deteriorated sharply, with corporate mid- and long-term loans plunging almost 40% to Yuan 250 billion (approximately $35 billion ) in April from a year ago. Live Events "Both household and corporate loans were pretty weak," said Michelle Lam, Greater China economist at Societe Generale SA. "It is quite possible that US tariffs have weighed on private-sector sentiment." Since banks usually aren't in a rush to meet their loan targets at the beginning of each quarter, yuan financing tends to be slow in April. Credit figures in recent months have also been buoyed by the government's push to sell bonds earlier in the year than before, as policymakers sought to stabilise growth with more infrastructure investment. The stockpile of household mid and long-term loans, a proxy for mortgages, returned to contraction in April, indicating more loans were repaid than taken out. That's an ominous sign for the property market, which is struggling to bottom out after years of decline. With the economy pressured by US tariffs, the PBOC has acted to ease monetary policy. At a recent briefing, central bank Governor Pan Gongsheng announced across-the-board rate cuts alongside other steps that could pump Yuan 2.1 trillion into the economy, including a reduction to the reserve requirement ratio.
