SHANGHAI, Feb 20 (Reuters) - China left benchmark

lending rates unchanged at the monthly fixing on Thursday,

showing authorities are going slow with monetary stimulus as

they prioritise financial and currency stability.

WHY IT'S IMPORTANT

A weakening yuan and narrowing net interest margins at

commercial banks limit Beijing's monetary easing scope at a time

when China is facing renewed trade tensions with a new Donald

Trump administration in the United States.

BY THE NUMBERS

The one-year loan prime rate (LPR) was kept

at 3.10%, while the five-year LPR was unchanged

at 3.60%.

In a Reuters poll of 30 market participants conducted this

week, all of them expected no changes to either of the two

rates.

Chinese banks extended 5.13 trillion yuan ($704.35

billion)in new yuan loans in January, more than quadrupling the

December figure, beating analysts' forecasts. However, the pace

of lending growth compared with a year earlier hit a record low,

indicating credit demand remains sluggish amid economic

uncertainties.

China's yuan has lost 2.4% against the dollar

since Donald Trump's election win in November.

CONTEXT

China's central bank

said

last week that it would adjust its monetary policy at the

appropriate time to support the economy, amid rising external

headwinds, particularly led by the threat of an escalating trade

war with the United States under President Donald Trump.

Trump has announced a 10% tariff on Chinese imports as

part of a broad plan to improve the U.S. trade balance,

triggering retaliation from Beijing.

During Trump's first term as president, a series of

tit-for-tat U.S.-China tariff announcements drove the yuan down

more than 12% against the dollar between March 2018 and May

2020.

KEY QUOTES

The authorities will likely guide deposit rates

moderately lower and accelerate replenishment of bank capital to

alleviate net interest margin pressure at commercial banks, said

Wang Qing, chief macro analyst at Golden Credit Rating.

"Changes to the pace of interest rate cuts by the

Federal Reserve or yuan fluctuations in 2025 will not materially

affect the implementation of the central bank's appropriately

loose monetary policy," Wang said.

($1 = 7.2833 Chinese yuan renminbi)