PBOC sets USD/CNY reference rate at 7.0901 vs. 7.0885 previous

Dhwani Mehta FXStreet

The People’s Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead on Wednesday at 7.0901 compared to the previous day's fix of 7.0885 and 7.1336 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

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD extends losses toward 1.3400 amid US-Iran tensions

EUR/USD keeps range near 1.1450 ahead of US sentiment data

Gold clings to recovery gains near $4,000 amid Fed hike bets

Bitcoin’s potential recovery in the second half hinges on these 4 catalysts

Bitcoin has fallen over 34% in the first half of this year as the King Crypto failed to capitalize on a good semester for risk assets despite the woes from the Iran war. With risk-loving investors increasingly looking at AI-related stocks and with no visible catalysts ahead, Bitcoin enters the second half of the year facing a crucial question: can it rebuild demand or will the correction deepen?

Risk-off rolls into Friday

I am waking up to a risk-off tape across equities this morning, with Asia-Pac shares on the ropes amid continued selling in the chip sector. Japan’s Nikkei 225 is down over 5% and on track to pencil in its worst single-day loss since March, while South Korea’s KOSPI has kept its door closed in observance of a national bank holiday.

-0.4%: Why the biggest CPI drop since 2020 couldn't buy back a single cut

The June CPI fell 0.4% on the month, the largest one-month decline since April 2020, dragging the annual rate to 3.5% from May's 4.2% and snapping a three-month acceleration streak. Core prices went nowhere, flat on the month and down to 2.6% YoY, both under consensus.