Morgan Stanley: Fed Rate Cuts Still on Track Despite Oil-Driven Inflation 
South Korea Central Bank Signals Cautious Policy Amid Inflation and Middle East Tensions 
Bank of Japan Eyes Further Rate Hikes Amid Middle East Tensions and Inflation Pressures 
RBI Holds Interest Rates Steady Amid Middle East Tensions and Global Uncertainty 
Bank of America Maintains Forecast for Two Fed Rate Cuts in 2026 Despite Inflation Risks 
Paraguay Holds Interest Rate at 5.5% as Inflation Remains Stable Amid Global Uncertainty 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
Citigroup Delays Fed Rate Cut Forecast Amid Strong Jobs Data and Inflation Concerns 
The interbank rate to borrow yuan for overnight loans crushed from a near record high of 61.3 percent on Friday to 14.05 percent on Monday. The rate is still elevated compared to the historical average, which is around 1-2 percent. The Friday’s rate of 61 percent is the second highest for the yuan, just behind last year January’s record rise to 66.815 percent.
While the 2016 January’s spike in the yuan-HIBOR was attributed to People’s Bank of China’s (PBoC) liquidity draining via state-owned banks, the causes for this year’s spike have been less clear. While is it largely expected that PBoC played its part, what concerned us at FxWirePro is the level of the interest rate on the yuan that was required to strengthen the currency.
We suspect that the high levels of interest rates that we are witnessing in the Hog Kong market, would start sip into the mainland and there are strong possibilities that the rates would rise all across the curve. The yuan is currently trading at 6.935 per dollar in the onshore market and 6.876 per dollar in the offshore market. The offshore yuan is down more than 1.2 percent the past two days after a record two-day gains last week.
