Why the stronger yuan might prompt a PBOC rate cut

A piece via Reuters in brief:

• China does not appear ready cut rates, given unexpectedly strong Q1 growth data
• China appears reluctant to cut rates ahead of the Fed
• Yuan has been rising steadily since mid-March, its trade-weighted index has hit its highest since October 2022, its just not rising against a very strong USD

Reuters concludes:

• If Beijing can accept the US dollar strength it could ease monetary policy to prioritise
  economic support.
• The yuan might even emerge stronger on the ensuing
  rally in Chinese risk assets.

CNY CFETS index (Reuters chart):

This article was written by Eamonn Sheridan at www.forexlive.com.