PBOC is expected to set the USD/CNY reference rate at 6.9576 – Reuters estimate

The People's Bank of China (PBOC) is expected to set the USD/CNY reference rate at approximately 6.9576 during today's trading session. This announcement is closely watched in Asian foreign exchange markets as the yuan operates under a managed floating exchange rate system, allowing it to trade within a ±2% band of a central reference. The PBOC considers various factors, including the previous day’s closing price and movements in major currencies like the US dollar, when determining the reference rate. The reference rate serves not only as a price point but also as a significant policy signal. A stronger rate may suggest the PBOC's efforts to prevent depreciation, while a weaker rate could indicate a willingness to allow for a softer yuan amid economic pressures. Consequently, this fixing becomes increasingly relevant in volatile global conditions, impacting market sentiment and investor strategies.