Dollar buoyant; yuan wobbles after China cuts lending benchmarks

The U.S. dollar rose broadly on Tuesday and notched a seven-month high against the yen, while the yuan slipped after China cut two benchmark lending interest rates for the first time in 10 months.

China on Tuesday lowered its one-year and five-year loan prime rates (LPR) by 10 basis points, as widely expected, as authorities seek to shore up a slowing recovery in the world’s second-largest economy.

The offshore yuan dipped slightly following the decision and was down more than 0.1% at 7.1734 per dollar, languishing near last week’s roughly seven-month low.

“The extent of the lowering – we’re talking basis points, not percentages, so it’s not really going to move the dial,” said Rodrigo Catril, senior currency strategist at National Australia Bank (NAB).

“What the market is really waiting for is for some concrete measures from the fiscal side in terms of spending.”

Elsewhere, the U.S. dollar edged marginally higher in cautious trade after a holiday in the United States on Monday kept market activity muted.

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