Key Moments
- The People’s Bank of China set Thursday’s USD/CNY central parity at 6.7840.
- The new fixing compares with the prior trading day’s reference rate of 6.7829.
- The official fixing came in above a 6.7261 estimate reported by Reuters.
Updated USD/CNY Fixing
The People’s Bank of China (PBOC) established the central USD/CNY reference rate for the upcoming Thursday trading session at 6.7840. This represents a slight increase from the previous session’s official fixing of 6.7829 and stands above a 6.7261 projection cited by Reuters.
| Fixing Detail | USD/CNY Level |
|---|---|
| Latest PBOC central rate (Thursday) | 6.7840 |
| Previous trading day’s fix | 6.7829 |
| Reuters estimate | 6.7261 |
Mandate and Policy Objectives of the PBOC
The primary monetary policy goals of the People’s Bank of China are to maintain overall price stability, including stability in the exchange rate, while supporting economic growth. In addition to its macroeconomic objectives, the central bank also pursues financial sector reforms, including the opening and development of China’s financial markets.
Ownership Structure and Governance
The PBOC is a state-owned institution under the People’s Republic of China and is therefore not classified as an independent central bank. Its strategic direction and management are heavily influenced by the Chinese Communist Party (CCP) Committee Secretary, who is nominated by the Chairman of the State Council. This role, rather than the governor position, plays a central part in guiding the institution’s policy stance. However, Mr. Pan Gongsheng currently holds both of these posts.
Key Monetary Policy Instruments
The PBOC employs a wider range of monetary policy instruments than many Western central banks. Its main tools include:
- A seven-day Reverse Repo Rate (RRR)
- The Medium-term Lending Facility (MLF)
- Foreign exchange market interventions
- The Reserve Requirement Ratio (RRR)
China’s benchmark lending gauge is the Loan Prime Rate (LPR). Shifts in the LPR directly affect borrowing costs for loans and mortgages as well as the returns on savings. By adjusting the LPR, the central bank can also influence the exchange rate of the Chinese renminbi.
Role of Private Banks in China
Private-sector banks operate alongside state-owned institutions in China, although they account for a relatively small part of the system. There are 19 private banks in total. The largest among them are digital lenders WeBank and MYbank, which are backed by technology groups Tencent and Ant Group, respectively, according to The Straits Times. In 2014, authorities permitted locally funded private lenders that are fully capitalized by private funds to enter and operate within the country’s state-dominated financial sector.
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