PBOC sets USD/CNY reference rate at 6.8198 vs. 6.8157 previous

Haresh Menghani FXStreet

On Monday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8198 compared to Friday's fix of 6.8157.

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.

AUD/USD stalls rebound above 0.7050 amid fresh Mideast tensions

AUD/USD stalls its rebound from almost two-month lows and treads water near 0.7050 in Asia on Monday, as the US Dollar pauses following Friday's upbeat US NFP-led blowout rally to a two-month high. However, renewed geopolitical tensions, along with surging bets on Fed rate hikes, continue to act as a tailwind for the USD, capping the higher-yielding Aussie.

USD/JPY holds higher ground toward 160.50 despite 'Yentervention' fears

USD/JPY holds higher ground toward 160.50 in Monday's Asian trading, despite intervention fears. Japan’s revised GDP print, which confirmed that the economy lost momentum in the first quarter, weighs on the Japanese Yen. Meanwhile, Friday's upbeat US NFP report and fresh Israel-Iran attacks favor the US Dollar bulls, underpinning the currency pair.

Gold recovers slightly from the $4,300 neighborhood; not out of the woods yet

Gold attracts some buyers at the start of a new week and reverses part of Friday's decline to its lowest since March 24, around the $4,300 mark. The US Dollar pauses after Friday’s upbeat US NFP-led blowout rally to a two-month high and supports the bullion. However, a surge in bets on a Fed rate hike, along with geopolitical uncertainties, favors USD bulls. The backs the case for the emergence of fresh sellers around the precious metal at higher levels.

Week ahead: Fed countdown begins amid US inflation data and geopolitical risks

The countdown to the biggest event of the year so far, the first Fed meeting under Chair Warsh on June 17, has officially commenced. Next week’s key events could serve as the best appetizer for Warsh’s first press conference, although market participants will probably be distracted by developments elsewhere.

Week ahead – Fed countdown begins amid US inflation data and geopolitical risks

Fed Chair Warsh’s first meeting approaches as key US inflation data could reshape expectations. Oil prices remain elevated as US-Iran talks continue; tariffs also return to the spotlight. ECB is expected to hike; will it be a one-off move or is July live?

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.