Key Moments
- The People’s Bank of China set the USD/CNY central parity rate at 6.7253 for Thursday’s session.
- The new fixing compares with the prior trading day’s reference rate of 6.7249.
- The PBoC continues to use a range of policy tools, including the Loan Prime Rate, to influence domestic funding costs and the Renminbi’s exchange rate.
Latest Central Parity Fixing
The People’s Bank of China (PBoC) set the central reference rate for the onshore Chinese yuan for the upcoming Thursday trading session at 6.7253 per US dollar. This represents a slight adjustment from the previous session’s fixing of 6.7249.
| Session | USD/CNY Central Rate |
|---|---|
| Previous trading day | 6.7249 |
| Thursday session | 6.7253 |
Mandate and Role of the PBoC
The People’s Bank of China serves as China’s central bank and is tasked with maintaining price stability, which includes working to stabilize the exchange rate, while also supporting economic growth. In addition, the institution pursues financial sector reforms, with an emphasis on opening and developing the domestic financial market.
Ownership and Governance Structure
The PBoC is wholly owned by the state of the People’s Republic of China, and is therefore not regarded as an independent central bank. Oversight and strategic direction are significantly influenced by the Chinese Communist Party Committee Secretary, who is nominated by the Chairman of the State Council. This role, rather than the governor’s position, is described as having primary sway over the central bank’s management and policy orientation. However, Mr. Pan Gongsheng currently holds both of these posts.
Key Monetary Policy Instruments
The PBoC employs a wider range of monetary policy tools than many Western central banks in order to reach its policy objectives. Its main instruments include:
- Seven-day Reverse Repo Rate
- Medium-term Lending Facility (MLF)
- Foreign exchange market interventions
- Reserve Requirement Ratio (RRR)
China’s benchmark lending gauge is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect borrowing and mortgage costs, as well as interest rates on deposits. By shifting the LPR, the central bank can also exert influence on the value of the Chinese Renminbi in foreign exchange markets.
Private Banking Presence in China
Private-sector banks operate alongside state-controlled financial institutions in China. There are 19 private banks, representing a relatively small portion of the broader financial system. The largest among them are the digital lenders WeBank and MYbank, which are backed by technology companies Tencent and Ant Group, per The Straits Times. In 2014, authorities permitted domestically funded private lenders, fully capitalized with private capital, to enter and operate in the largely state-dominated banking sector.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
