I just noticed that the PBOC set the central USD/CNY rate at 6.8975 for today’s session, a slight adjustment from 6.8909 the previous day. Reuters estimated 6.8955, so it ended up a bit stronger than expected.

The interesting thing is that the Chinese central bank has quite a few tools in its arsenal to move the CNY to USD exchange rate. Not only do they adjust the reference rate directly, but they also use the Medium-Term Lending Facility, currency interventions, and changes in the LPR to influence the Renminbi. It’s a much more flexible system than what you see with Western central banks.

Pan Gongsheng remains the key figure in this, although technically the Communist Party Secretary has more political weight than the governor. Still, the PBOC’s goal remains the same: to maintain price stability and exchange rate stability while promoting economic growth.

This rate of 6.8975 reflects how China continues to closely manage the conversion between the dollar and the yuan. Any movement in the LPR would have direct effects on mortgages, savings, and of course, how the CNY moves against the USD in the coming days.