6.7138: PBOC sets USD/CNY reference rate, compared with 6.7147 previously

The USD/CNY central rate is set at 6.7138 for Friday’s trading session. The People’s Bank of China (PBOC) fixing compares with 6.7147 the previous day and a Reuters estimate of 6.6548.

PBOC: Key Questions Answered

People's Bank of China: Policy Mandate

Maintaining price stability, including exchange rate stability, and supporting economic growth are the core monetary policy goals of the People's Bank of China (PBoC). Its remit also includes financial reforms aimed at opening up and developing the financial market.

PBoC: State Ownership and Leadership

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 who exerts key influence over the PBoC’s management and direction. The Secretary is nominated by the Chairman of the State Council. Both positions, however, are currently held by Mr Pan Gongsheng.

PBoC: Main Monetary Policy Instruments

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

19 Private Banks: China’s Private Lending Sector

China permits private banks and has 19, accounting for only a small share of its financial system. According to The Straits Times, digital lenders WeBank and MYbank are the largest, with backing from technology giants Tencent and Ant Group. Domestic lenders funded entirely by private capital were first allowed to operate in the state-dominated financial sector in 2014.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights