CNH rallied overnight on the coattail of JPY strength, BBH FX strategists note.  

Seven-day repo rate to be the PBOC’s new policy benchmark

“CNH rallied overnight on the coattail of JPY strength. The People’s Bank of China (PBOC) slashed the medium-term lending facility by 20bps to 2.30%, the biggest cut since April 2020.”

“The move comes on the heels of Monday’s unexpected 10bps cut to the seven-day reverse repo rate to 1.70%. The seven-day repo rate is expected to be the PBOC’s new policy benchmark as it is closer to market rates.”

“The PBOC is trying to shore-up soft Chinese economic activity. However, until China deals with its huge debt overhang (total debt is more than 300% of GDP), the country looks set for weaker growth in the years ahead.”