Key Moments
- The People’s Bank of China set the USD/CNY central parity rate at 6.7489 for the upcoming Thursday trading session.
- The new fixing compared with the previous session’s level of 6.7468.
- The latest central rate differed from a Reuters estimate of 6.7184.
Latest USD/CNY Central Parity Setting
The People’s Bank of China (PBOC) set the central parity rate for USD/CNY at 6.7489 for the trading session ahead on Thursday. This level was slightly higher than the prior session’s fixing of 6.7468 and stood apart from a Reuters estimate of 6.7184.
| Reference | USD/CNY Rate |
|---|---|
| New PBOC central parity rate (Thursday session) | 6.7489 |
| Previous session’s fixing | 6.7468 |
| Reuters estimate | 6.7184 |
Mandate and Role of the People’s Bank of China
The People’s Bank of China is tasked with maintaining price stability, including stability in the exchange rate, while supporting economic growth. As China’s central bank, it also works to advance financial sector reforms, including efforts to open and develop the domestic financial market.
Ownership and Governance Structure
The PBOC is owned by the state of the People’s Republic of China and is not regarded as an independent institution. Oversight and strategic direction rest heavily with the Chinese Communist Party (CCP) Committee Secretary, who is nominated by the Chairman of the State Council. This party position exerts more influence over the central bank’s course than the governor’s role. However, Mr. Pan Gongsheng currently holds both of these posts.
Key Monetary Policy Instruments
The PBOC employs a wide array of tools to pursue its policy goals, differing from typical frameworks in many Western economies. Its primary instruments include the seven-day Reverse Repo Rate, the Medium-term Lending Facility, foreign exchange interventions, and the Reserve Requirement Ratio.
China’s benchmark lending reference is the Loan Prime Rate (LPR). Movements in the LPR directly affect borrowing costs for loans and mortgages, as well as returns on deposits. Adjustments to the LPR also influence the exchange rate of the Chinese renminbi.
Private Banking in China
China permits the operation of private banks, with 19 such institutions active in the market, representing a relatively small share of the overall financial system. Among the largest are the digital lenders WeBank and MYbank, which are backed by technology companies Tencent and Ant Group, respectively, per The Straits Times.
In 2014, regulators allowed domestically funded banks entirely capitalized by private investors to enter the predominantly state-run banking sector, opening a channel for private capital to participate more directly in financial intermediation.
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