PBOC holds loan rates a 16th month as the yuan reaches a multi-year high

The People’s Bank of China left its one-year and five-year loan prime rates unchanged at 3.0 per cent and 3.5 per cent, the 16th straight month without a change¹. The announcement came on 21 September 2026 and kept benchmark lending rates at historic lows². Jakarta Globe noted regional investors watching the same decision as Indonesian stocks fell 0.88 per cent ahead of a Bank Indonesia rate decision⁷.

The currency moved instead. The yuan strengthened to more than a three-and-a-half-year high against the US dollar as the central bank softened its curb on the currency⁴. The offshore yuan traded at 6.6946 per dollar, up about 0.03 per cent in Asian trade, after the People’s Bank of China set its pre-market fix³. One account put the level as the strongest since June 2022, attributing it to the central bank tolerating gains ahead of the US and China summit⁵.

How markets took it

Chinese stocks edged higher after the rate decision, with regulators also signalling a tougher stance in one area of the market⁶. Chinese shares closed higher on Monday amid signals of a steady monetary policy stance⁹. Intraday, the Shanghai benchmark was quoted up 0.55 per cent at 3,925 and the Shenzhen Component up 0.80 per cent at 13,743⁸. Trading Economics reported the Shanghai Composite closing 0.99 per cent higher, led by Greenland Holdings, up 9.85 per cent, Poly Real Estate, up 5.56 per cent, and China Fortune, up 2.80 per cent¹³.

What to watch

Nikkei Asia framed the currency move as China slow-walking yuan appreciation while the US and Europe demand trade rebalancing, contrasting it with August 2015, when an abrupt devaluation by the People’s Bank of China caught global markets off guard and forced Beijing to respond¹⁰.

Offshore funding is also in play. The Hong Kong Monetary Authority said the People’s Bank of China will issue 60 billion yuan of renminbi bills in Hong Kong¹¹. The Straits Times reported Xi arriving at the summit with China’s trade engine running, noting that US threats in August of secondary sanctions on countries doing business with Iran, which Bessent called an ‘Economic D-Day’, appear not to have bitten¹².