PBOC sets USD/ CNY reference rate for today at 7.0064 (vs. estimate at 6.9678)

PBOC's Reference Rate Setting

The People's Bank of China (PBOC) has set the USD/CNY reference rate at 7.0064 today, significantly higher than the estimated 6.9678, suggesting a potential depreciation of the yuan. The previous close was 6.9739, and this adjustment is likely to shock market participants. The yuan is traded under a managed floating exchange rate system that allows fluctuations within a ±2% band around the reference rate.

Impact on the Market

This increase in the reference rate will attract attention in the foreign exchange markets. The PBOC also injected 179.3 billion yuan through 7-day reverse repos at a stable rate of 1.4%, aimed at enhancing liquidity. However, the higher USD/CNY rate setting may undermine market confidence in China's economic indicators. In the current market environment, rising concerns over trade disputes with Western countries could also significantly impact the yuan. Investors will need to adopt a cautious stance regarding future currency trends.