Key Moments
- The People’s Bank of China set the USD/CNY central parity at 6.7828 for Monday’s session.
- The new fixing compares with Friday’s reference rate of 6.7811.
- The Monday fixing came in against a Reuters estimate of 6.7344.
Latest USD/CNY Central Parity Fixing
On Monday, the People’s Bank of China (PBOC) set the central reference rate for the onshore USD/CNY pair at 6.7828 for the upcoming trading session. This compares with the previous trading day’s official fixing of 6.7811 and a Reuters projection of 6.7344.
| Fixing Reference | USD/CNY Level |
|---|---|
| Monday PBOC central rate | 6.7828 |
| Previous fix (Friday) | 6.7811 |
| Reuters estimate | 6.7344 |
PBOC – Mandate and Policy Objectives
The People’s Bank of China has two primary monetary policy goals: maintaining price stability – including the stability of the exchange rate – and supporting economic growth. The central bank is also tasked with advancing financial sector reforms, such as opening and developing the country’s financial markets.
Ownership and Governance Structure
The PBOC is a state-owned institution under the authority of the People’s Republic of China. It is not viewed as an independent central bank. Strategic direction and management are heavily influenced by the Chinese Communist Party (CCP) Committee Secretary, who is appointed by the Chairman of the State Council, rather than by the governor alone. Mr. Pan Gongsheng currently serves in both roles.
Key Monetary Policy Instruments
Compared with many Western central banks, the PBOC employs a wider array of policy tools to achieve its objectives. Its main instruments include:
- Seven-day Reverse Repo Rate (RRR)
- Medium-term Lending Facility (MLF)
- Foreign exchange market interventions
- Reserve Requirement Ratio (RRR)
China’s benchmark loan pricing reference is the Loan Prime Rate (LPR). Adjustments to the LPR have a direct impact on the cost of borrowing for loans and mortgages, as well as the returns on savings. Through changes in the LPR, the central bank can also affect the exchange rate of the Chinese renminbi.
Role of Private Banks in China
Private sector banks are permitted to operate in China. There are 19 private banks, representing a relatively small share of the overall financial system. Among the largest are digital institutions WeBank and MYbank, which are supported by technology companies Tencent and Ant Group, according to The Straits Times. In 2014, authorities allowed domestically owned lenders funded entirely by private capital to enter the predominantly state-controlled banking sector.
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