Key Moments:
- The People’s Bank of China set the USD/CNY central parity rate at 6.7191 for Wednesday’s session.
- The new fixing compared to the previous day’s central rate of 6.7167.
- The 6.7191 setting was above a Reuters estimate of 6.6855 for the USD/CNY fixing.
Daily Fixing Update
On Wednesday, the People’s Bank of China (PBOC) set the central USD/CNY reference rate for the upcoming trading session at 6.7191. This compares with the prior day’s official fixing of 6.7167 and a Reuters estimate of 6.6855.
| Fixing Detail | USD/CNY Level |
|---|---|
| Current PBOC central rate (Wednesday) | 6.7191 |
| Previous day’s official fix | 6.7167 |
| Reuters estimate | 6.6855 |
Mandate and Role of the PBOC
The People’s Bank of China serves as the country’s central bank, with core monetary policy objectives focused on maintaining price stability, which includes exchange rate stability, and supporting economic growth. In addition to these goals, the PBOC works to advance financial reforms, such as 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, and therefore is not regarded as an autonomous institution. A Chinese Communist Party Committee Secretary, who is nominated by the Chairman of the State Council, plays a central role in shaping the bank’s management and strategic direction, rather than the governor alone. However, Mr. Pan Gongsheng currently holds both of these posts.
Key Monetary Policy Instruments
The PBOC employs a wide range of tools to pursue its policy objectives, reflecting a framework that differs from those used in many Western economies. Its main instruments include:
- Seven-day Reverse Repo Rate
- Medium-term Lending Facility (MLF)
- Foreign exchange interventions
- Reserve Requirement Ratio (RRR)
China’s benchmark interest rate is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect borrowing costs on loans and mortgages, as well as returns on savings. Through changes in the LPR, the central bank can also exert influence over the exchange rate of the Chinese renminbi.
Private Banking Sector in China
Private banks operate within China’s largely state-dominated financial system, although they represent a relatively small share. There are 19 private banks in the country. Among these, the largest are digital lenders WeBank and MYbank, which are backed by technology firms Tencent and Ant Group, per The Straits Times. In 2014, authorities permitted domestically funded lenders, fully capitalized by private capital, to participate in the financial sector.
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