Key Moments
- The People’s Bank of China set the USD/CNY central parity rate at 6.7878 for Friday’s trading session.
- The new fixing compares with the previous day’s reference rate of 6.7888.
- The central parity setting is one of several tools the PBoC uses alongside rates, reserve requirements, and FX operations.
Latest USD/CNY Reference Rate
On Friday, the People’s Bank of China (PBoC) set the central parity rate for USD/CNY at 6.7878 for the upcoming trading session. This compares with the prior session’s official fixing of 6.7888.
| Session | USD/CNY Central Parity Rate |
|---|---|
| Friday (current) | 6.7878 |
| Previous trading day | 6.7888 |
PBoC Mandate and Policy Focus
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’s Financial System
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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