PBOC sets USD/CNY reference rate at 6.8650 vs. 6.8635 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 6.8650 compared to the previous day's fix of 6.8635 and 6.8294 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.

AUD/USD steadies below 0.7100 as the post-Fed USD rally pauses

AUD/USD consolidates the previous day's losses to a near one-month low, trading below 0.7100 during the Asian session on Thursday as the US Dollar pauses its hawkish, Fed-inspired rally to its highest level since late July. Meanwhile, the US-Iran standoff keeps the geopolitical risk premium in play and underpins the safe-haven buck, capping the Aussie despite RBA rate-hike bets.

USD/JPY pulls back from two-week high; slips below 156.00 as focus shifts to BoJ

USD/JPY drifts lower during the Asian session on Thursday, snapping a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to its highest level since late July, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This drags the pair below 156.00 as the focus shifts to the BoJ meeting, starting today.

Gold eyes $4,300 as USD pauses hawkish Fed-inspired rally

Gold climbs to the $4,300 neighborhood during the Asian session on Thursday, reversing much of the previous day's losses to a six-week low as the US Dollar eases from its highest level since late July. Meanwhile, oil-driven inflation fears continue to fuel rate hike bets on the back of the Fed's hawkish outlook. Furthermore, US-Iran tensions favor USD bulls and should cap the non-yielding bullion.

What happens to Ethereum price now that the Clarity Act has failed

Ethereum and the wider crypto market felt the impact of the Clarity Act failing to clear the Senate. Analysts had touted the bill as a major tailwind for the second-largest cryptocurrency. Expectations that its advance would trigger a rally have now been reset. The setback has left its mark on ETH.

Fed recap: One hike down, more to come? The Fed’s new rate path says yes

The Federal Reserve (Fed) raised its Fed Fund Target Range (FFTR) range by 25 basis points to 3.75%-4.00% in a unanimous decision, saying the move would support a timelier return to its 2% inflation goal.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.