6.7171: PBOC fixes USD/CNY reference rate versus 6.7162 previously

6.7171 is the USD/CNY central rate set by the People’s Bank of China (PBOC) for Tuesday’s upcoming trading session. The fixing compares with 6.7162 on the previous day and a Reuters estimate of 6.6731.

PBOC: Key Questions Answered

The People's Bank of China: Core Responsibilities

Maintaining price stability, including exchange rate stability, and supporting economic growth are the main monetary policy goals of the People's Bank of China (PBoC). Financial reform is another objective for China’s central bank, including opening up and developing the 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. Key influence over its management and direction rests with the Chinese Communist Party (CCP) Committee Secretary rather than the governor. The Secretary is nominated by the Chairman of the State Council. At present, however, Mr Pan Gongsheng occupies both posts.

PBoC Monetary Policy: Main Instruments

To meet its objectives, the PBoC deploys a wider range of monetary policy instruments than those used in Western economies. Its principal tools are the 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. The central bank can also influence Chinese Renminbi exchange rates through LPR changes.

19 Private Banks: China’s Private Banking Sector

China permits private banks and has 19, representing 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. Domestic lenders funded entirely by private capital were allowed to enter China’s state-dominated financial sector in 2014.

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