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China’s 7-day repo rate has dropped to the lowest level in over two months, according to MNI analyst Anthony Barton.  

The drop in the repo rate comes ahead of the weeklong holiday in China set to begin from Oct. 1.

China’s repo rate drop contradicts the situation in the US, where the Fed is being forced to intervene to stem the rise in repo rates. For instance, the Fed on Wednesday sold $75 billion in market repurchase agreement or repos to bring interest rates within its intended range of 1.75% to 2%. The central bank began intervening in the money markets last week.

Going purely by the action in the interest rate markets, the path of least resistance for the USD/CNY is to the higher side. The pair is currently flat-lined around 7.1248.