PBOC sets USD/CNY reference rate at 6.7817 vs. 6.7808 previous

On Friday, the People's Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead at 6.7817, up from the previous day's rate of 6.7808 and the Reuters estimate of 6.7262. The PBOC's primary objectives are to maintain price stability, including exchange rate stability, and to foster economic growth. The central bank, owned by the state of the People's Republic of China, is not considered autonomous and its direction is influenced by the Chinese Communist Party Committee Secretary, currently held by Pan Gongsheng.

The PBOC employs a range of monetary policy tools, such as a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), and foreign exchange interventions to achieve its goals. Unlike Western economies, the PBOC's benchmark interest rate is the Loan Prime Rate (LPR), which directly influences loan and mortgage rates and the interest paid on savings.

By adjusting the LPR, the PBoC can also impact the exchange rates of the Chinese Renminbi. China currently has 19 private banks, primarily digital lenders like WeBank and MYbank, backed by tech giants Tencent and Ant Group.