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China's yuan held steady against the dollar on Monday as investors tracked a U.S. Senate move to advance a funding deal and end a protracted government shutdown, while waiting on more Chinese data to gauge the health of the domestic economy. The U.S. Senate's move on Sunday provided some hope of an end to a 40-day shutdown that has sidelined federal workers, delayed food aid and snarled air travel. On the economic front in China, data over the past few days showed an unexpected contraction in exports, while consumer inflation showed a surprising pick-up due to strong holiday demand, leaving investors none the wiser about any monetary policy stimulus in the remainder of this year. "China's economy has slowed further in the fourth quarter of 2025, though the trajectory indicates that it will still be able to meet the official growth target of around 5% for 2025," said Ho Woei Chen, economist at UOB. "We see the resumption of U.S. Federal Reserve rate cuts and weak domestic price pressures creating the room for the People's Bank of China (PBOC) to ease monetary policy before the year-end." She expects a 10-basis-point interest rate reduction and a cut to banks' reserve requirement ratio (RRR). As of 0336 GMT, the onshore yuan USDCNY was trading largely flat at 7.1210 per dollar from the previous late-night close on Friday. Its offshore counterpart USDCNH was up about 0.04% in Asian trade to 7.1234. Prior to the market opening, the PBOC set the midpoint rate USDCNY at 7.0856 per dollar, 319 pips firmer than a Reuters' estimate USDCNH of 7.1175. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. "The economy is in a slower gear, but the PBOC's FX policy stance seems to prefer a well-anchored CNY," said Paul Mackel, global head of FX research at HSBC. China is due to release credit data this week and other indicators of economic activity such as retail sales on Friday, and currency traders expect these figures to shed more light on the economy. Key onshore vs offshore levels: Overnight dollar/yuan swap onshore -11.00 pips vs. offshore -11.00Three-month SHIBOR (SHIBOR=) 1.6 % vs. 3-month CNH HIBOR 1.8 % LEVELS AT 0336 GMT
