Key Moments
- The People’s Bank of China set Friday’s USD/CNY central parity at 6.7939
- The new fixing compared with the prior session’s reference rate of 6.7906
- The 6.7939 level also differed from a 6.7795 estimate cited by Reuters
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 6.7939. This compares with the previous day’s fixing of 6.7906 and a 6.7795 projection reported by Reuters.
| Reference | USD/CNY Level |
|---|---|
| Current PBOC central rate (Friday) | 6.7939 |
| Previous day’s central rate | 6.7906 |
| Reuters estimate | 6.7795 |
PBOC Mandate and Policy Objectives
The primary monetary policy objectives of the People’s Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
Institutional Structure and Governance
The PBoC is owned by the state of the People’s Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Key Monetary Policy Instruments
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Role of Private Banks in China
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
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