Key Moments
- The People’s Bank of China set Tuesday’s USD/CNY central parity at 6.7809.
- The new fixing compares with the previous session’s level of 6.7828.
- The latest reference rate diverged from a Reuters estimate of 6.7170.
Updated USD/CNY Central Parity Setting
The People’s Bank of China (PBOC) set the USD/CNY central reference rate for the upcoming Tuesday trading session at 6.7809. This follows the prior day’s official fixing of 6.7828 and contrasts with a Reuters estimate of 6.7170 for the latest setting.
| USD/CNY Reference | Rate |
|---|---|
| Current PBOC central rate (Tuesday) | 6.7809 |
| Previous PBOC central rate | 6.7828 |
| Reuters estimate for latest fix | 6.7170 |
PBOC Mandate and Policy Focus
The People’s Bank of China defines its primary monetary policy objectives as safeguarding price stability, including stability in the exchange rate, and supporting economic growth. In addition to these goals, the central bank seeks to advance financial reforms, such as opening and developing the domestic financial market.
Institutional Structure and Control
The PBOC is owned by the state of the People’s Republic of China, and as such is not regarded as an autonomous institution. The 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. However, Mr. Pan Gongsheng currently holds both of these positions.
Monetary Policy Instruments
The PBOC employs a wide array of policy tools to pursue its objectives, differing in scope from those typically used in Western economies. Key instruments include the seven-day Reverse Repo Rate, the Medium-term Lending Facility (MLF), foreign exchange interventions, and the Reserve Requirement Ratio (RRR).
China’s benchmark interest rate is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect borrowing costs in the market for loans and mortgages, as well as the interest rates paid on savings. By altering the LPR, the central bank can also influence the exchange rate of the Chinese Renminbi.
Role of Private Banks in China
Private banks operate alongside state-controlled institutions in China, though they represent a relatively small share of the overall system. There are 19 private banks in the country. The largest among them are digital lenders WeBank and MYbank, which are backed by Tencent and Ant Group, respectively, per The Straits Times.
In 2014, authorities permitted domestic lenders that are fully capitalized by private funds to participate in the state-dominated financial sector, allowing these privately funded banks to operate within the broader banking landscape.
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