The Chinese Yuan (CNY) typically reacts to Federal Reserve rate cuts through shifts in capital flows, trade balances, and investor sentiment. A Fed rate cut weakens the U.S. dollar (USD), which can lead to CNY appreciation as the dollar loses strength. However, the People's Bank of China (PBOC) often intervenes to maintain currency stability, especially to keep exports competitive. A weaker dollar generally reduces pressure on China's dollar-denominated debt and can boost capital inflows into Chinese assets, supporting the yuan. However, if the Fed’s rate cut signals economic weakness in the U.S., global risk appetite may decline, leading investors to seek safe-haven assets like the USD or gold, potentially limiting CNY gains. China’s response also depends on PBOC policy—if it eases monetary policy in tandem with the Fed, the impact on USD/CNY could be neutralized. Traders closely monitor both central banks’ policies and trade relations to anticipate CNY movements following Fed rate decisions.