PBOC sets USD/ CNY reference rate for today at 7.0602 (vs. estimate at 7.0444)

The People's Bank of China (PBOC) has set the USD/CNY reference rate at 7.0602 today, which is higher than the market estimate of 7.0444, indicating strength in the yuan. This reference rate setting follows yesterday's close of 7.0482 and marks the strongest value for the CNY in 14 months. The yuan is trading within a managed floating exchange rate system, allowing it to fluctuate within +/- 2% of the reference rate. Recent economic data shows that the recovery in the Chinese economy is still heavily reliant on the supply side, highlighting concerns over fragile consumer demand. Industrial output grew by just 4.8% year-on-year in November, falling below expectations, while retail sales rose by only 1.3%, a significant slowdown from the previous month. Looking ahead, traders should monitor how the yuan reacts to this strong reference rate and the potential impacts of forthcoming economic indicators. PBOC's policies will play a crucial role in guiding market expectations during this period of economic uncertainty.