China’s yuan bounces from one-month low, policy lending rate held

SHANGHAI, Jan 15 (Reuters) – China’s yuan weakened to a one-month low against the dollar on Monday but managed to bounce back by midday, while the central bank surprised markets by leaving its medium-term policy rate unchanged despite expectations of a cut to bolster the economy. The People’s Bank of China (PBOC) stood pat on the rate for one-year medium-term lending facility loans, amid signs that currency weakness is limiting the scope for monetary easing. Despite the steady policy rate, markets still expect some form of monetary easing in response to persistent deflationary pressure. “Policy focus has shifted to the effectiveness of monetary policy. Today’s hold means the chance of a reserve requirement ratio (RRR) cut in February is higher,”…