The USD/CNY reference rate for the People’s Bank of China is set to be around 0115 GMT.
People’s Bank of China (PBOC), China central bank
central bank
A central bank is a financial institution that manages a country’s monetary policy, and often this also involves issuing and/or monitoring currency and regulating the money supply. Central banks also typically act as lenders of last resort to banks in times of financial crisis, and can also supervise and regulate banks and other financial institutions. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of Japan
A central bank is a financial institution that manages a country’s monetary policy, and often this also involves issuing and/or monitoring currency and regulating the money supply. Central banks also typically act as lenders of last resort to banks in times of financial crisis, and can also supervise and regulate banks and other financial institutions. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of Japan
Read this term, is responsible for determining the daily midpoint of the yuan (also known as the RMB or RMB). The People’s Bank of China (PBOC) follows a managed floating exchange rate system which allows the value of the yuan to fluctuate within a certain range, called a “range”, around a central reference rate, or “midpoint”. It’s currently +/- 2% and some think it could widen to 3% this year. The governor of the People’s Bank of China (PBOC) over the weekend highlighted the trend towards more foreign exchange liberalization.
How does the process work:
- Daily midpoint setting: Every morning, the People’s Bank of China sets a midpoint for the yuan against a basket currencies
currencies
Currencies are generally a widely circulated form of money, being the primary medium of exchange with regard to the buying and selling of goods and services. They are often issued by a particular government or group of governments, by way of notes and coins. Other forms of currency include earlier metals such as gold and silver, and digital currencies such as bitcoin. Currencies serve as the backbone of the economy of a country or countries, due to the perception of value held by the population
Currencies are generally a widely circulated form of money, being the primary medium of exchange with regard to the buying and selling of goods and services. They are often issued by a particular government or group of governments, by way of notes and coins. Other forms of currency include earlier metals such as gold and silver, and digital currencies such as bitcoin. Currencies serve as the backbone of the economy of a country or countries, due to the perception of value held by the population
Read this termPrimarily the US dollar. The central bank takes into account factors such as market supply and demand, economic indicators, and fluctuations in the international currency market. The midpoint acts as the reference point for that day’s trading.
- Trading range: The People’s Bank of China (PBOC) allows the yuan to move within a range around the midpoint. The trading range is set at +/- 2%, which means that the yuan can rise or fall by a maximum of 2% from the midpoint during a single trading day. This range is subject to change by the People’s Bank of China (PBOC) based on economic conditions and policy goals.
- Intervention: If the value of the yuan approaches the limits of the trading range or experiences excessive volatility, the People’s Bank of China (PBOC) may intervene in the foreign exchange market by buying or selling the yuan to stabilize its value. This helps maintain a gradual and disciplined adjustment in the value of the currency.
Note that the People’s Bank of China’s management of the yuan’s exchange rate has been a source of controversy, with some arguing that the central bank devalues the currency to gain a trade advantage. However, in recent years, China has been moving towards a more market-oriented exchange rate regime and has allowed greater flexibility in the value of the yuan.