USD/CNY reference rate set by PBOC at 6.774, up from 6.7191 previously

For Thursday’s trading session, the USD/CNY central rate has been set at 6.774 by the People’s Bank of China (PBOC). This compares with the previous day’s fixing of 6.7191 and the Reuters estimate of 6.6797.

PBOC FAQs Explained

What are the responsibilities of the People's Bank of China?

Maintaining price stability, including exchange rate stability, and supporting economic growth are the main monetary policy goals of the People's Bank of China (PBoC). Financial reforms are another priority for China’s central bank, including opening up and developing the financial market.

How is ownership of the PBoC structured?

As a state-owned institution of the People's Republic of China (PRC), the PBoC is not regarded as autonomous. Rather than the governor, it is the Chinese Communist Party (CCP) Committee Secretary who exercises a key influence over the central bank’s management and direction. The Secretary is nominated by the Chairman of the State Council. At present, however, Mr. Pan Gongsheng occupies both posts.

Which key instruments does the PBoC use to implement policy?

To meet its objectives, the PBoC draws on a wider range of monetary policy instruments than those used in Western economies. Its main instruments comprise the seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), interventions in the foreign exchange market and Reserve Requirement Ratio (RRR). China’s benchmark interest rate, however, is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect market borrowing rates for loans and mortgages, as well as the interest earned on savings. The central bank can also use LPR adjustments to influence the exchange rates of the Chinese Renminbi.

Can privately owned banks operate in China?

Yes. There are 19 private banks in China, accounting for only a small share of its financial system. According to The Straits Times, digital lenders WeBank and MYbank are the largest private banks, with backing from technology giants Tencent and Ant Group. It was in 2014 that China permitted domestic lenders funded entirely by private capital to operate in its state-dominated financial sector.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights