PBOC sets USD/CNY reference rate at 7.0638 vs. 7.0686 previous

Haresh Menghani FXStreet

On Friday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 7.0638 compared to the previous day's fix of 7.0686.

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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD continues its rise as Dollar retreats on Fed action and soft data

EUR/USD advances during the North American on Thursday up 0.41% after the Fed decided to cut rates, alongside the release of weaker than expected job data in the United States. The pair trades at 1.1742 after bouncing off daily lows of 1.1682.

GBP/USD steadies at fresh near-term highs

GBP/USD is holding firmly in bullish territory heading into the tail end of the week, but Cable bidders ran into a technical resistance point at the 1.3400 handle on Thursday. The Federal Reserve delivered a third straight interest rate cut this week, bolstering broad-market risk appetite and pushing the US Dollar into the low side across the board.

Gold eases from seven-week highs of $4,285, focus turns to Fedspeak

Gold price retreats from seven-week highs near $4,285 in the Asian session on Friday. The precious metal extended its upside as the Fed's 25 bps rate cut and dovish expectations weighed heavily on the US Dollar. High investment demand from India and a record rally in Silver also helped Gold's upside. Fedspeak is back in focus.

Zcash gains 12% amid rising interest in ZEC treasury Cypherpunk Technologies

Zcash is leading the crypto market recovery in the early Asian session on Friday, following a 12% jump over the past 24 hours. The move has extended its weekly gain to nearly 25%.

FOMC Summary: A split cut and a clear shift toward caution

The Federal Reserve (Fed) went ahead with a 25 basis points rate cut, taking the target range to 3.50–3.75%. But the tone around the decision mattered just as much as the move.

Solana dips as hawkish Fed cuts dampen market sentiment

Solana (SOL) price is trading below $130 at the time of writing on Thursday, after being rejected at the upper boundary of its falling wedge pattern. The broader market weakness following the Federal Reserve’s hawkish rate cut has added to downside momentum.