Key Moments
- The People’s Bank of China set Friday’s USD/CNY central parity rate at 6.7934.
- The new fixing compared with the previous day’s level of 6.7909.
- The reference rate diverged from a Reuters estimate of 6.7734.
Latest USD/CNY Central Parity Setting
On Friday, the People’s Bank of China (PBoC) set the central USD/CNY reference rate for the upcoming trading session at 6.7934. This compares with the prior day’s official fixing of 6.7909 and a 6.7734 estimate reported by Reuters.
| Fixing Detail | USD/CNY Level |
|---|---|
| Friday PBoC central parity rate | 6.7934 |
| Previous day’s official fix | 6.7909 |
| Reuters estimate | 6.7734 |
Mandate and Ownership of the PBoC
The People’s Bank of China is tasked with maintaining price stability, including stability in the exchange rate, while supporting economic growth. The central bank also seeks to advance financial sector reforms, including the opening and development of the domestic financial market.
The institution is owned by the state of the People’s Republic of China and is not regarded as an independent entity. The Chinese Communist Party Committee Secretary, who is nominated by the Chairman of the State Council, exerts significant influence over the central bank’s direction and governance rather than the governor. However, Mr. Pan Gongsheng currently holds both of these roles.
Policy Toolkit and Benchmark Rates
The PBoC deploys a wide range of monetary policy instruments. Its main tools include the seven-day Reverse Repo Rate, the Medium-term Lending Facility, foreign exchange market operations, and the Reserve Requirement Ratio.
China’s benchmark lending rate is the Loan Prime Rate (LPR). Adjustments to the LPR affect borrowing costs for loans and mortgages, as well as returns on savings. Through changes in the LPR, the central bank can also exert influence over movements in the Chinese Renminbi’s exchange rate.
Role of Private Banks in China
Private banks operate alongside state-owned institutions in China’s financial system. There are 19 private banks, which represent a relatively small share of the sector. The largest among them are digital banks WeBank and MYbank, backed by technology companies Tencent and Ant Group, according to The Straits Times.
In 2014, authorities permitted domestically funded private lenders, fully capitalized with private capital, to participate in the state-dominated banking industry.
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