Key Moments
- The People’s Bank of China set the USD/CNY central parity rate at 6.8108 for Tuesday’s trading session.
- The new fixing compared with the previous day’s central rate of 6.8088.
- The Tuesday reference rate diverged from a 6.7605 Reuters estimate cited in the report.
Latest PBOC USD/CNY Fixing
On Tuesday, the People’s Bank of China (PBOC) set the central USD/CNY reference rate for the upcoming trading session at 6.8108. This level followed the prior session’s fixing of 6.8088 and differed from a 6.7605 Reuters estimate mentioned in the report.
| Fixing Detail | USD/CNY Level |
|---|---|
| Tuesday PBOC central rate | 6.8108 |
| Previous day’s fixing | 6.8088 |
| Reuters estimate | 6.7605 |
PBOC Mandate and Policy Objectives
The People’s Bank of China is responsible for pursuing monetary policy objectives that include maintaining price stability, which also encompasses exchange rate stability, and fostering economic growth. The central bank is additionally tasked with advancing financial reforms such as opening and developing the domestic financial market.
Ownership and Governance Structure
The PBOC is a state-owned institution under the People’s Republic of China, rather than an independent central bank. The Chinese Communist Party Committee Secretary, who is nominated by the Chairman of the State Council, plays a decisive role in shaping the management and strategic direction of the institution, rather than the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Key Monetary Policy Instruments
The PBOC employs a wider array of monetary policy tools than many Western central banks. Its main instruments include:
- Seven-day Reverse Repo Rate
- Medium-term Lending Facility (MLF)
- Foreign exchange interventions
- Reserve Requirement Ratio (RRR)
China’s benchmark lending rate is the Loan Prime Rate (LPR). Movements in the LPR directly affect borrowing costs for loans and mortgages, as well as the returns paid on deposits. Adjustments to the LPR also influence the exchange rate dynamics of the Chinese Renminbi.
Role of Private Banks in China
Private banks operate as a relatively small part of China’s broader financial system. There are 19 private banks in the country. Among them, the largest are digital lenders WeBank and MYbank, which are supported by Tencent and Ant Group, per The Straits Times. In 2014, regulators permitted domestically funded lenders fully backed by private capital to participate in the state-dominated banking sector.
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