Key Moments
- The People’s Bank of China set Tuesday’s USD/CNY central parity rate at 6.7670.
- The new fixing compares with the previous session’s rate of 6.7698.
- A Reuters estimate for the reference rate stood at 6.7051.
Updated USD/CNY Reference Rate
The People’s Bank of China (PBOC) set the central USD/CNY reference rate for Tuesday’s trading session at 6.7670. This compares with the prior day’s official fixing of 6.7698 and a Reuters estimate of 6.7051.
| Reference | USD/CNY Level |
|---|---|
| Current PBOC central rate (Tuesday) | 6.7670 |
| Previous official fix | 6.7698 |
| Reuters estimate | 6.7051 |
PBOC Mandate and Policy Role
The People’s Bank of China is tasked with maintaining overall price stability, which includes supporting the stability of the exchange rate, while also fostering economic growth. As China’s central bank, it is also responsible for pushing forward financial reforms, including measures aimed at opening and developing the domestic financial markets.
Institutional Structure and Governance
The PBOC is owned by the state of the People’s Republic of China and is therefore not classified as an independent institution. Oversight and strategic direction are heavily influenced by the Chinese Communist Party (CCP) Committee Secretary, who is proposed by the Chairman of the State Council, rather than by the central bank governor. Mr. Pan Gongsheng currently holds both the position of CCP Committee Secretary and the role of governor.
Key Monetary Policy Instruments
The PBOC employs a wider range of monetary policy tools than many Western central banks to achieve its objectives. Its main instruments include the seven-day Reverse Repo Rate, the Medium-term Lending Facility, foreign exchange interventions, and adjustments to the Reserve Requirement Ratio.
China’s benchmark lending rate is the Loan Prime Rate (LPR). Movements in the LPR directly impact the funding costs for loans and mortgages, as well as returns on deposits. Through changes in the LPR, the central bank can also affect the exchange rate of the Chinese Renminbi.
Private Banking Sector in China
China permits the operation of private banks, with 19 such institutions currently in existence, representing a relatively small portion of the overall financial system. The largest among them are the digital lenders WeBank and MYbank, backed by Tencent and Ant Group respectively, according to The Straits Times.
In 2014, Chinese authorities allowed domestically owned lenders funded entirely by private capital to participate in the largely state-controlled banking sector.
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