FOREX-Yuan sinks after PBOC, dollar little changed on MLK Day

The yuan fell on Monday to a one-month low after China's central bank surprised markets by keeping its medium-term policy rate steady, while the dollar was little changed on Martin Luther King (MLK) Jr. Day, a U.S. public holiday. The People's Bank of China (PBOC) left interest rates unchanged when rolling over maturing medium-term policy loans, defying market expectations for a cut to shore up China's bumpy post-pandemic economic recovery. "Some economists have argued that the PBoC may have chosen to hold rates steady to avoid further downside in the yuan, and excess volatility in the FX market," said Kathleen Brooks, research director at XTB.