Key Moments
- The People’s Bank of China set the USD/CNY central parity rate at 6.7195 for Thursday’s session.
- The new fixing compared with the prior day’s level of 6.7192.
- The official fixing diverged from a 6.6756 estimate cited from Reuters.
Latest USD/CNY Central Parity Setting
On Thursday, the People’s Bank of China (PBOC) set the USD/CNY central rate for the upcoming trading session at 6.7195. This compares with the previous day’s reference rate of 6.7192 and a 6.6756 estimate reported by Reuters.
| Reference | USD/CNY Level |
|---|---|
| Current PBOC central rate (Thursday) | 6.7195 |
| Previous day’s PBOC fix | 6.7192 |
| Reuters estimate | 6.6756 |
PBOC: Role and Policy Mandate
The People’s Bank of China is tasked with maintaining price stability, which includes stability in the exchange rate, while fostering economic growth. In addition, the central bank is responsible for advancing financial reforms, such as the opening and development of China’s financial markets.
Ownership and Governance Structure
The PBOC is owned by the state of the People’s Republic of China and is therefore not regarded as an independent institution. Strategic direction and management are heavily influenced by the Chinese Communist Party Committee Secretary, who is nominated by the Chairman of the State Council rather than by the central bank governor. Mr. Pan Gongsheng currently holds both the role of CCP Committee Secretary and governor.
Key Monetary Policy Instruments
The PBOC employs a wide range of tools to pursue its policy goals, which differs from the approach typically seen in 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 interest rate is the Loan Prime Rate. Adjustments to the LPR directly affect borrowing costs for loans and mortgages, as well as returns on savings. Through changes in the LPR, the central bank can also exert influence on the value of the Chinese Renminbi in foreign exchange markets.
Presence of Private Banks in China
Private banks operate alongside state-controlled financial institutions within China’s banking sector. There are 19 private banks, representing a relatively small slice of the overall system. The largest among them are digital lenders WeBank and MYbank, backed by Tencent and Ant Group respectively, according to The Straits Times.
China opened the door in 2014 for domestically funded lenders fully capitalized by private capital to participate in the country’s state-dominated financial industry.
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