PBOC sets USD/CNY reference rate at 6.7888 vs. 6.7882 previous

Haresh Menghani FXStreet

The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Thursday at 6.7888 compared to the previous day's fix of 6.7882 and 6.7470 Reuters estimate.

PBOC FAQs

What does the People's Bank of China do?

The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.

Who owns the PBoC?

The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.

What are the main policy tools used by the PBoC?

Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.

Are private banks allowed in China?

Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

GBP/USD breaches below 1.3500, two-day lows

GBP/USD faces renewed selling pressure, eroding the earlier advance and slipping back to the sub-1.3500 region on Wednesday. Cable’s loss of upside momentum follows the resurgence of the demand for the Greenback amid steady geopolitical tensions. Looking ahead, the British Pound is expected to remain under scrutiny in light of the release of UK GDP data on Thursday.

EUR/USD weakens to multi-day lows near 1.1520

EUR/USD makes a U-turn and trades with decent losses near 1.1520 following the closing bell on Wall Street on Wednesday. The US Dollar’s recovery post-US CPI data keeps the risk complex under pressure in a context where geopolitics takes centre stage once again. Moving forward, attention remains on US inflation with the release of Producer Prices alongside weekly Claims.

Gold holds comfortably above $4,400 after hitting fresh 10-week highs

Gold sits above $4,400 after hitting its highest level since June 5, at $4,450, in Asia on Thursday. Gold looks to build on the uptrend, following soft US inflation data. Receding Fed-hike bets continue to drive flows towards the non-yielding bullion amid subdued US Dollar price action. However, the US-Iran standoff could limit any meaningful USD decline and cap the precious metal as traders now look to the US PPI for a fresh impetus.

Bitcoin faces thin liquidity and missing demand amid seller stress — Glassnode

Bitcoin (BTC) is showing signs of growing market exhaustion, with weakening liquidity and subdued demand leaving the market vulnerable to a sharp move, according to a Glassnode report on Wednesday. The firm stated that Bitcoin is trading between two important cost-basis levels as market activity has fallen to its lowest point since 2019.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.