USD/CNY reference rate fixed by PBOC at 6.7146, up from 6.7138 previously

The USD/CNY central rate for Monday’s upcoming trading session stands at 6.7146, as set by the People’s Bank of China (PBOC). This compares with Friday’s fixing of 6.7138 and the Reuters estimate of 6.6625.

PBOC: Key Questions Answered

What is the People's Bank of China’s mandate?

Safeguarding price stability, including exchange rate stability, and supporting economic growth are the core monetary policy goals of the People's Bank of China (PBoC). Alongside these objectives, China’s central bank seeks to carry out financial reforms, including opening up and developing the financial market.

How is the PBoC owned and directed?

State ownership by the People's Republic of China (PRC) means the PBoC is not regarded as an autonomous institution. Rather than the governor, it is the Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, who exercises key influence over the PBoC’s management and direction. At present, however, Mr Pan Gongsheng holds both positions.

How does the PBoC use its principal policy instruments?

To meet its objectives, the PBoC draws on a wider range of monetary policy instruments than those used in Western economies. Its main tools comprise a seven-day Reverse Repo Rate (RRR), the Medium-term Lending Facility (MLF), interventions in the foreign exchange market and the Reserve Requirement Ratio (RRR). China’s benchmark interest rate, however, is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect market rates on loans and mortgages, as well as the interest paid on savings. The central bank can also influence Chinese Renminbi exchange rates through changes to the LPR.

What role do private banks have in China?

Private banks are permitted in China, where 19 such lenders account for only a small share of the financial system. According to The Straits Times, digital lenders WeBank and MYbank are the largest private banks, with backing from technology giants Tencent and Ant Group. China opened its state-dominated financial sector to domestic lenders funded entirely by private capital in 2014.

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