6.7147: PBOC fixes USD/CNY reference rate against 6.7165 previously

6.7147 is Thursday’s USD/CNY central rate. The People’s Bank of China (PBOC) set the fixing for the coming trading session against the previous day’s 6.7165 and a Reuters estimate of 6.6596.

PBOC: Key Questions Answered

The People's Bank of China: Role and Objectives

Price stability, including a stable exchange rate, and economic growth are the principal monetary policy objectives of the People's Bank of China (PBoC). The central bank also seeks to carry out financial reforms, including opening up and developing China’s financial market.

PBoC 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, the Chinese Communist Party (CCP) Committee Secretary plays a key role in shaping the bank’s management and direction. The Secretary is nominated by the Chairman of the State Council. Mr. Pan Gongsheng currently occupies both the Secretary and governor posts.

PBoC Monetary Policy: Main Instruments

To meet its objectives, the PBoC deploys a wider range of monetary policy instruments than Western economies. Its main tools comprise the seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange intervention 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 costs for loans and mortgages, as well as the interest paid on savings. Through LPR changes, China’s central bank can also affect Chinese Renminbi exchange rates.

19 Private Banks: China’s Private Banking Sector

China permits private banks and has 19 of them, accounting for only a small share of its financial system. According to The Straits Times, digital lenders WeBank and MYbank are the largest, backed by technology giants Tencent and Ant Group. In 2014, China authorised domestic lenders funded entirely by private capital to operate within its state-dominated financial sector.

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