Key Moments
- The People’s Bank of China set the USD/CNY central parity at 6.7854 for Wednesday’s session.
- The new fixing compared with the prior day’s reference rate of 6.7905.
- The latest fix differed from a 6.7421 estimate cited from Reuters.
New Central Parity Rate for USD/CNY
On Wednesday, the People’s Bank of China (PBOC) set the central reference rate for the onshore USD/CNY pair at 6.7854 for the upcoming trading session. This fixing came in below the previous day’s central parity level of 6.7905 and contrasted with a 6.7421 estimate reported by Reuters.
| Reference | USD/CNY Level |
|---|---|
| Latest PBOC central rate | 6.7854 |
| Previous day’s fix | 6.7905 |
| Reuters estimate | 6.7421 |
Mandate and Policy Role of the PBOC
The PBOC’s core monetary policy goals are to maintain price stability, including stability in the exchange rate, and to foster economic growth. The central bank is also tasked with carrying out financial sector reforms, which include opening and advancing China’s financial markets.
Ownership and Governance Structure
The People’s Bank of China is a state-owned institution under the People’s Republic of China and is not viewed as an independent central bank. Oversight and strategic direction are significantly shaped by the Chinese Communist Party (CCP) Committee Secretary, who is appointed by the Chairman of the State Council, rather than by the governor alone. However, Mr. Pan Gongsheng currently occupies both the governor role and the CCP Committee Secretary position.
Key Monetary Policy Instruments
The PBOC employs a wide range of policy tools compared with many Western central banks. Its main instruments include:
- Seven-day Reverse Repo Rate
- Medium-term Lending Facility (MLF)
- Foreign exchange market interventions
- Reserve Requirement Ratio (RRR)
In addition, the Loan Prime Rate (LPR) serves as China’s benchmark rate. Movements in the LPR directly affect borrowing costs for loans and mortgages, as well as returns on savings. By adjusting the LPR, the PBOC can also exert influence over the value of the Chinese Renminbi in foreign exchange markets.
Presence of Private Banks in China
China has 19 privately owned banks, which represent a relatively small segment of the overall banking system. Among these, WeBank and MYbank are the largest and operate as digital lenders backed by technology companies Tencent and Ant Group, respectively, according to The Straits Times. In 2014, authorities permitted domestically funded private institutions, fully capitalized with private capital, to enter and operate in the predominantly state-controlled banking sector.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
