LONDON, Jan 15 Reuters The yuan fell on Monday to a onemonth low after China39;s central bank surprised markets by keeping its mediumterm policy rate steady, while the dollar was little changed on Martin Luther King MLK Jr. Day, a U.S. public holiday.

The People39;s Bank of China PBOC left interest rates unchanged when rolling over maturing mediumterm policy loans, defying market expectations for a cut to shore up China39;s bumpy postpandemic economic recovery.

That sent the onshore yuan sliding to a onemonth low of 7.1813 per dollar before recouping some of those losses to trade down 0.08 at 7.1746.

Its offshore counterpart fell as far as 7.1912 per dollar, languishing near Friday39;s onemonth trough.

Some economists have argued that the PBoC may have chosen to hold rates steady to avoid further downside in the yuan, and excess volatility in the FX market, said Kathleen Brooks, research director at XTB.

Rate cuts could still be on the table, said Tommy Wo, senior economist at Commerzbank.

The U.S. Fed39;s pivot has allowed the PBoC to conduct more accommodative monetary policy. There will be more room for PBoC rate cuts when the timing of Feds rate reduction becomes clearer.

China39;s fourthquarter gross domestic product GDP, December industrial production, retail sales and unemployment rate are among the key economic indicators out on Wednesday, which are likely to provide further clarity on the outlook for the world39;s secondlargest economy.

The dollar…