19.06.2025 02:24

The People's Bank of China (PBOC) announced its daily USD/CNY central exchange rate on Thursday. Setting the rate at 7.1729, this represented a slight strengthening of the yuan against the dollar compared to the previous day's 7.1761. This figure also undercut the Reuters forecast of 7.1916.


The PBOC's mandate encompasses a dual focus: maintaining price stability, including exchange rate stability, and fostering robust economic growth. Simultaneously, it actively pursues financial reforms aimed at liberalizing and expanding China's financial markets.


Unlike independent central banks in Western nations, the PBOC operates under significant influence from the Chinese Communist Party (CCP). While the governor holds a prominent role, the CCP Committee Secretary, appointed by the State Council Chairman, wields considerable power over the PBOC's strategic direction. Currently, Mr. Pan Gongsheng holds both positions.


The PBOC employs a diverse array of monetary policy tools to achieve its goals, differing from the approaches used in Western economies. Key instruments include the seven-day Reverse Repo Rate (RRR), the Medium-term Lending Facility (MLF), foreign exchange interventions, and adjustments to the Reserve Requirement Ratio (RRR). The Loan Prime Rate (LPR), however, serves as China's benchmark interest rate, directly influencing loan and mortgage rates, savings interest, and ultimately, the Renminbi's exchange rate.


Despite a state-dominated financial landscape, China boasts nineteen privately owned banks. These, however, represent a small segment of the overall financial system. Notable among them are the digital lenders WeBank and MYbank, backed respectively by Tencent and Ant Group, as reported by internet sources. The entrance of these fully privately capitalized banks into the financial sector dates back to 2014, marking a significant step in China's financial liberalization.