Key Moments
- The People’s Bank of China set the USD/CNY central parity rate at 6.8054 for Tuesday’s session.
- The new fixing compared with the previous day’s level of 6.8066.
- The latest setting differed from a Reuters estimate of 6.7838.
Updated Central Parity Rate for USD/CNY
The People’s Bank of China (PBOC) set the USD/CNY central rate for the upcoming Tuesday trading session at 6.8054. This compares with the prior session’s fixing of 6.8066 and a Reuters estimate of 6.7838.
| Reference | USD/CNY Level |
|---|---|
| Current PBOC central rate (Tuesday) | 6.8054 |
| Previous day’s fix | 6.8066 |
| Reuters estimate | 6.7838 |
Mandate and Role of the PBOC
The primary monetary policy goals of the People’s Bank of China are to maintain price stability, including exchange rate stability, and to support economic growth. In addition, China’s central bank seeks to advance financial sector reforms, such as facilitating the opening and development of financial markets.
Governance and Ownership Structure
The PBOC is owned by the state of the People’s Republic of China and is therefore not regarded as an independent institution. The Chinese Communist Party Committee Secretary, who is nominated by the Chairman of the State Council, plays a central role in shaping the management and policy direction of the PBOC rather than the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Key Monetary Policy Instruments
The PBOC uses a wider range of monetary policy tools than those commonly seen in Western economies. Its primary instruments include the seven-day Reverse Repo Rate, the Medium-term Lending Facility (MLF), foreign exchange interventions, and the Reserve Requirement Ratio (RRR).
China’s benchmark lending reference is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect borrowing costs in the market for loans and mortgages, as well as the interest earned on savings. Through changes in the LPR, the central bank can also influence the exchange rate of the Chinese renminbi.
Presence of Private Banks in China
Private banks are permitted to operate in China. There are 19 private banks, representing a relatively small segment of the overall financial system. The largest among them are digital institutions WeBank and MYbank, backed by technology companies Tencent and Ant Group, according to The Straits Times. In 2014, authorities allowed domestically funded lenders fully capitalized by private capital to operate within the state-led banking sector.
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