PBOC sets USD/CNY reference rate at 6.7670 vs. 6.7698 previous

On Tuesday, the People's Bank of China (PBOC) announced a USD/CNY reference rate of 6.7670, marking a slight decrease from the preceding day's 6.7698. The PBOC's primary objectives encompass maintaining price and exchange rate stability, fostering economic growth, and executing financial reforms. As a government-owned institution, the PBOC is guided by the Chinese Communist Party's Committee Secretary, currently held by Pan Gongsheng, who shares responsibilities with the State Council Chairman.

Unlike Western banks, the PBOC employs a range of monetary policy tools, including the seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions, and Reserve Requirement Ratio (RRR). The Loan Prime Rate (LPR) serves as the benchmark interest rate, influencing market loan and mortgage rates, as well as savings interest.

By adjusting the LPR, the central bank can impact the Chinese Renminbi's exchange rate. Currently, China boasts 19 private banks, primarily digital lenders WeBank and MYbank, with significant backing from tech conglomerates Tencent and Ant Group. In 2014, China permitted domestic banks with private funds to operate within the state-controlled financial system.