Key Moments
- The People’s Bank of China set Monday’s USD/CNY central parity rate at 6.7841.
- The new fixing compares with Friday’s reference rate of 6.7817.
- The official fixing differed from a Reuters estimate of 6.7248.
Latest USD/CNY Fixing
The People’s Bank of China (PBOC) set the central USD/CNY reference rate for Monday’s trading session at 6.7841. This compares with the previous trading day’s (Friday’s) fix of 6.7817 and a Reuters estimate of 6.7248.
| Reference | USD/CNY Level |
|---|---|
| Monday PBOC central rate | 6.7841 |
| Friday PBOC central rate | 6.7817 |
| Reuters estimate | 6.7248 |
Mandate and Role of the PBOC
The People’s Bank of China is responsible for maintaining price stability, including stability in the exchange rate, while also supporting economic growth. The central bank additionally focuses on advancing financial reforms, such as 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 and is therefore not regarded as an independent institution. A Chinese Communist Party Committee Secretary, who is nominated by the Chairman of the State Council, plays a central role in shaping the central bank’s management and strategic direction, rather than the governor alone. At present, Mr. Pan Gongsheng holds both the Party Secretary and governor positions.
Policy Toolkit and Benchmark Rates
The PBOC relies on a range of monetary policy instruments that is broader than those typically used in Western economies. Its main tools include the seven-day Reverse Repo Rate (RRR), 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). Movements in the LPR directly affect borrowing costs for loans and mortgages, as well as returns on savings. By adjusting the LPR, the central bank can also influence the value of the Chinese renminbi in foreign exchange markets.
Private Banking in China
Private-sector participation in China’s banking industry is permitted, though it remains limited in scope. There are 19 private banks operating in the country, representing a relatively small share of the overall financial system. The largest of these are digital lenders WeBank and MYbank, which are backed by Tencent and Ant Group, respectively, according to The Straits Times.
In 2014, authorities opened the door for domestically funded lenders that are fully capitalized by private investors to participate in the financial sector, which has traditionally been dominated by state-owned institutions.
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