Key Moments
- The People’s Bank of China set Thursday’s USD/CNY central parity at 6.7807.
- The latest fixing came in below the prior session’s reference rate of 6.7829.
- The PBOC’s fixing contrasted with a 6.7167 USD/CNY estimate cited from Reuters.
Updated Daily Fix for USD/CNY
The People’s Bank of China (PBOC) set the central USD/CNY reference rate for Thursday’s trading session at 6.7807. This compares with the previous day’s official fixing level of 6.7829 and a 6.7167 projection reported by Reuters.
| USD/CNY Reference | Rate |
|---|---|
| Current PBOC central parity (Thursday) | 6.7807 |
| Previous session’s PBOC fix | 6.7829 |
| Reuters estimate | 6.7167 |
Mandate and Policy Focus of the PBOC
The PBOC’s core monetary policy goals are to maintain price stability, including stability in the exchange rate, and to support economic growth. In addition, China’s central bank is tasked with advancing financial sector reforms, with an emphasis on opening and developing the domestic financial market.
Institutional Structure and Governance
The PBOC is a state-owned institution under the People’s Republic of China and is not regarded as an independent central bank. The Chinese Communist Party (CCP) Committee Secretary, who is nominated by the Chairman of the State Council, exerts significant influence over the central bank’s strategic direction and management, rather than the governor alone. However, Mr. Pan Gongsheng currently holds both of these posts.
Monetary Policy Instruments
The PBOC applies a wide toolkit of monetary policy instruments, which differs from the standard frameworks used in many Western economies. Its key tools include the seven-day Reverse Repo Rate (RRR), the Medium-term Lending Facility (MLF), foreign exchange operations, and the Reserve Requirement Ratio (RRR).
China’s benchmark lending reference, the Loan Prime Rate (LPR), plays a central role in the transmission of monetary policy. Adjustments to the LPR feed through directly to borrowing costs in the economy, affecting interest rates on loans, mortgages, and savings. By altering the LPR, the PBOC can also influence the exchange rate dynamics of the Chinese Renminbi.
Role of Private Banks in China
Private-sector banks operate as a relatively small component of China’s broader financial system. There are 19 private banks in total. The largest among them are the digital institutions WeBank and MYbank, which are backed by technology companies Tencent and Ant Group, per The Straits Times.
In 2014, authorities permitted domestically owned lenders that are fully funded by private capital to participate in the state-dominated banking sector, opening the door to private banks within the regulatory framework.
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