Key Moments
- The People’s Bank of China set Monday’s USD/CNY central parity at 6.7208.
- The new fixing compared with Friday’s reference rate of 6.7220.
- The Monday fix came in against a Reuters estimate of 6.6897.
Latest USD/CNY Fixing
On Monday, the People’s Bank of China (PBOC) set the central USD/CNY reference rate for the upcoming trading session at 6.7208. This compares with the previous trading day’s (Friday’s) central parity of 6.7220 and a 6.6897 estimate reported by Reuters.
| Reference | USD/CNY Level |
|---|---|
| Monday PBOC fix | 6.7208 |
| Friday PBOC fix | 6.7220 |
| Reuters estimate | 6.6897 |
PBOC Mandate and Policy Focus
The People’s Bank of China has two primary monetary policy goals: maintaining price stability, including the stability of the exchange rate, and supporting economic growth. In addition, the central bank seeks to advance financial sector reforms, which include opening and developing China’s financial markets.
Ownership and Governance Structure
The PBOC is owned by the state of the People’s Republic of China, meaning it is not regarded as an independent institution. Oversight of the central bank is heavily influenced by the Chinese Communist Party (CCP) Committee Secretary, who is nominated by the Chairman of the State Council and holds significant authority over the PBOC’s strategic direction, rather than the governor alone. Mr. Pan Gongsheng currently holds both the CCP Committee Secretary role and the governorship.
Key Monetary Policy Instruments
The PBOC utilizes a wide range of tools to implement monetary policy, differing in scope from those typically used in Western economies. Core instruments include:
- Seven-day Reverse Repo Rate (RRR)
- Medium-term Lending Facility (MLF)
- Foreign exchange market interventions
- Reserve Requirement Ratio (RRR)
China’s benchmark lending gauge is the Loan Prime Rate (LPR). Movements in the LPR directly affect borrowing costs on loans and mortgages, as well as returns on savings. Adjusting the LPR also has implications for the exchange rate of the Chinese Renminbi.
Role of Private Banks in China
China permits the operation of private banks, with 19 such institutions currently part of the financial system. These private banks represent only a small share of the overall sector. Among them, WeBank and MYbank are the largest, functioning as digital lenders supported by Tencent and Ant Group, according to The Straits Times. In 2014, authorities opened the door for domestically owned lenders that are fully funded by private capital to operate within the largely state-controlled banking industry.
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