Widening U.S.-China Rate Gap Set to Weigh on Yuan’s Resilience

(Bloomberg) — Interest-rate differentials are turning against the yuan again and that’s likely to put short-term pressure on the currency, according to strategists.

The spread between three-month yuan Shibor, an indicator of Chinese bank wholesale borrowing costs, and the dollar Libor equivalent has expanded to the widest since November after shrinking late last year. China’s market is awash with liquidity from a central bank in easing mode, while the U.S. is dealing with a hawkish Federal Reserve and uncertainties over a banking crisis.