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By Rae Wee
SINGAPORE, June 20 (Reuters) - The yuan slipped toward seven-month lows on Tuesday as China cut lending benchmarks, while the Australian dollar fell after its latest central bank meeting minutes showed keeping interest rates unchanged had been under consideration.
China on Tuesday lowered its one-year and five-year loan prime rates (LPR) by 10 basis points, the first such easing in 10 months as authorities seek to shore up a slowing economic recovery.
The decision knocked the yuan lower in Asian trading and it last fell 0.2% in onshore trade to 7.1775 per dollar, not far from last week's nearly seven-month low of 7.1819.
Similarly, the offshore yuan was more than 0.2% lower at 7.1820 per dollar, languishing near last week's trough of 7.1916, its lowest since late November.
"Markets were expecting bigger support and were hoping for a larger LPR cut," said OCBC currency strategist Christopher Wong. "The delivery of a smaller LPR cut came as a signal of lesser support and the disappointment was felt in softer (yuan)."
Investors continue to be on the lookout for greater government support measures, as a faltering post-pandemic recovery has kept sentiment fragile.
"The playbook may be slightly different, in a sense that it's not going to be a big bang stimulus. It's probably going to be more targeted," said Bank of Singapore currency strategist Moh Siong Sim.
Elsewhere, the Australian dollar tumbled more than 0.8% to a session low of $0.6789 after minutes from the Reserve Bank of Australia's (RBA) latest policy meeting released on Tuesday showed its decision to raise interest rates in June was "finely balanced".
"Markets really latched onto the fact that there was a debate between a pause and a hike, and that the decision to hike was 'finely balanced'. And that has lessened fears that another hike is imminent," said Matt Simpson, senior market analyst at City Index.
The New Zealand dollar likewise slumped 0.52% to $0.6166.
RATES OUTLOOK
In other currencies, the U.S. dollar rose broadly to a seven-month peak of 142.26 yen, extending its gain against the Japanese currency after the Bank of Japan's (BOJ) decision on Friday to maintain its ultra-easy monetary policy.
The yen has come under renewed pressure amid rising interest rate differentials between Japan and other developed markets.
"We believe that Japan's economy is recovering solidly compared to other major economies and will continue to outperform in the future. But, if monetary policy fails to reflect this shift of economic fundamentals and the BOJ keeps its dovish policy, then the yen should depreciate even more," Min Joo Kang, ING senior economist for South Korea and Japan, said in a client note.