China raises short-term interest rate following US rate hike

BEIJING (AP) — China’s central bank raised short-term interest rates Thursday following the U.S. rate increase as Beijing tries to shore up the value of its currency and stanch an outflow of money.

The People’s Bank of China raised the rate for its six-month and one-year medium-term lending facility and open-market repurchase operations by 0.1 percent. The benchmark one-year commercial lending rate was unchanged.

Beijing faces a dilemma as it tries to defend the exchange rate of its yuan without depressing economic growth, which has been shored up by repeated infusions of credit.

Economists have warned the yuan would face further downward pressure if higher U.S. interest rates caused money to flow out of China in search of higher returns. Beijing has spent tens of billions of dollars to prop up the currency, also known as the renminbi, after investors began moving money out of China due to expectations its value would sink.

The People’s Bank cited the U.S. Federal Reserve’s Wednesday increase and “some signs of recovery” in China’s own economy.

The mention of the U.S. rate hike “suggests that the PBOC may have been partly motivated by a desire to follow the Fed in order to avoid additional downward pressure on the renminbi,” Julian Evans-Pritchard of Capital Economics said in a report.

 
 
 
RECOMMENDED ARTICLE

How to save a choking infant

How to save a choking infant
READ MORE >
 
 

Canadian Police Probe ‘Suspicious’ Deaths of Billionaire Couple

Canadian Police Probe ‘Suspicious’ Deaths of Billionaire Couple
TORONTO—Canadian police said they were investigating the mysterious deaths of Barry Sherman, founder of Canadian pharmaceutical firm Apotex ...
READ MORE >
 
US

Trump Administration Cuts Red Tape

Trump Administration Cuts Red Tape
President Donald Trump is pushing hard on deregulation. He disclosed his administration’s achievements in reducing red tape and federal regulations ...
READ MORE >
 

North Korea Warns Country Is on Brink of War

North Korea Warns Country Is on Brink of War
North Korea's communist regime warned that it is on the brink of war. In an article published in ...
READ MORE >
 

Tillerson Urges Lull in North Korea ‘Threatening Behavior’ Before Any Talks

Tillerson Urges Lull in North Korea ‘Threatening Behavior’ Before Any Talks
U.S. Secretary of State Rex Tillerson on Friday called for a "sustained cessation of North Korea's threatening behavior" before talks ...
READ MORE >
 

Dine at the Michelin 3-Star Cantonese Restaurant One of 4 in the World

Dine at the Michelin 3-Star Cantonese Restaurant One of 4 in the World
Hong Kong, a tightly packed metropolis, has a whopping 14,000 restaurants! Hard to pick one? Go around and ...
READ MORE >