Key Moments
- The People’s Bank of China set the USD/CNY central parity rate at 6.7900 for Tuesday’s session.
- The new fixing compared with the previous day’s reference rate of 6.7884.
- The latest fix differed from a 6.7497 estimate reported by Reuters.
Session Fixing Details
The People’s Bank of China (PBOC) set the central USD/CNY reference rate for the upcoming Tuesday trading session at 6.7900. This compares with the prior session’s fixing of 6.7884 and a Reuters projection of 6.7497.
| Parameter | Value |
|---|---|
| New USD/CNY central rate | 6.7900 |
| Previous USD/CNY fix | 6.7884 |
| Reuters estimate | 6.7497 |
Mandate and Objectives of the PBOC
The People’s Bank of China (PBoC) is responsible for maintaining price stability, which includes stabilizing the exchange rate, while also supporting economic growth. In addition to these core monetary policy goals, the central bank pursues financial sector reforms, including measures aimed at opening and developing China’s financial markets.
Ownership and Governance Structure
The PBoC is owned by the state of the People’s Republic of China (PRC) and is not regarded as an independent institution. Management and policy direction are strongly influenced by the Chinese Communist Party (CCP) Committee Secretary, who is nominated by the Chairman of the State Council, rather than by the governor alone. According to the article, Mr. Pan Gongsheng currently holds both positions of CCP Committee Secretary and governor.
Policy Instruments and Benchmark Rates
The PBoC employs a wider array of monetary policy tools than many Western central banks. Its main instruments include the seven-day Reverse Repo Rate, the Medium-term Lending Facility (MLF), foreign exchange market interventions, and the Reserve Requirement Ratio (RRR).
China’s benchmark lending gauge is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect interest costs on loans and mortgages and influence returns on savings. By changing the LPR, the central bank can also affect the exchange rate of the Chinese Renminbi.
Role of Private Banks in China
Private banks operate alongside state-owned institutions in China, though they represent a relatively small share of the overall financial system. There are 19 private banks in the country. The largest among them are digital lenders WeBank and MYbank, backed by technology companies Tencent and Ant Group, as reported by The Straits Times.
In 2014, authorities permitted domestically funded lenders, fully capitalized by private capital, to participate in the largely state-controlled banking sector.
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