RBA cuts interest rates to two-year low
The Reserve Bank of Australia voted to cut interest rates by 25 basis points to 3.85%, the lowest since May 2023, and the second such cut since the start of the policy easing cycle in February.
The decision was in line with expectations and aims at boosting the economy through policy easing as inflationary pressures receded.
The bank noted that any additional rate cuts this year will heavily depend on data and economic developments.
Yuan skids to one-week trough after Chinese rate cut
The Chinese yuan fell in Asian trade on Tuesday against a basket of major rivals, extending losses against the dollar for the third straight session and plumbing a week low, after the decision by the People’s Bank of China to cut interest rates for the first time in 2025.
The decision is in line with expectations as the Chinese authorities seek to ease the monetary policies and protect the economy from the impact of US tariffs.
The Price
The US dollar rose 0.2% on the yuan to 7.2260, the highest since May 12, with a session-low at 7.2093.
The yuan closed down 0.1% on the dollar on Monday following weak Chinese retail sales data.
China’s Central Bank
The People’s Bank of China voted to cut one-year borrowing costs by 10 basis points to 3.0%, the first such cut since October 2024, while cutting five-year borrowing rates by 10 basis points to 3.5%.
Major government banks also cut interest rates on deposits amid attempts to prop up the economy amid a tense trade environment.
The banks cut the short-term deposit rate by 5 basis points to 0.05%, and cut the one-year rate by 15 basis points to 0.95%.
However, economists continue to doubt China’s ability to achieve the 5% growth target amid the heavy challenges facing its economy this year.
The sentiment did improve somewhat in recent days after Beijing and Washington agreed to pause most tariffs for 90 days as they discuss a potential trade agreement.
Ripple declines amid mixed risk appetite in the markets
Ripple fell on Monday amid a mixed risk appetite with investors assessing the markets after the US credit rating downgrade.
Moody’s finally joined Standard & Poor and Fitch and downgraded the pristine US credit rating by one notch, pointing to the persistent US budget deficit and higher borrowing costs as reasons for concern.
US 30-year treasury yields rallied to 5% following the announcement, passing November 2023 highs.
Goldman Sachs released estimates that the chances of a US recession this year continue to persist.
Ripple
On trading, Ripple fell 1.1% as of 20:27 GMT on Coinmarketcap to $2.37.
US dollar under pressure after US credit rating cut
The US dollar fell against most major rivals on Monday after the US credit rating downgrade.
Moody’s finally joined Standard & Poor and Fitch and downgraded the pristine US credit rating by one notch, pointing to the persistent US budget deficit and higher borrowing costs as reasons for concern.
US 30-year treasury yields rallied to 5% following the announcement, passing November 2023 highs.
Goldman Sachs released estimates that the chances of a US recession this year continue to persist.
Otherwise, the dollar index fell 0.7% as of 20:10 GMT to 100.4, with a session-high at 100.9, and a low at 100.06.
Aussie
The Australian dollar rose 0.7% against its US counterpart as of 20:24 GMT to $0.6452.
Loonie
The Canadian dollar rose 0.1% against its US counterpart as of 20:24 GMT to $0.7163.