The People's Bank of China set the onshore yuan (CNY) reference rate for the trading session ahead.
- USD/CNY is the onshore yuan. Its permitted to trade plus or minus 2% from this daily reference rate.
- CNH is the offshore yuan. USD /CNH has no restrictions on its trading range.
- A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC.
The previous close was 7.1369.
The Bank has set the rate today is the strongest for the CNY since June 5.
PBOC injects 438bn via 7-day RR, sets rate at an unchanged 1.8%
- 460bn yuan of RRs mature today
- thus a net 22bn yuan drain on the day in Open Market Operations (OMOs)
In the face of growing public debt, Chinese financial regulators have been increasing liquidity at a never-before-seen rate in recent months in an attempt to contain short-term interest rate volatility. There have been six instances where China extended more than 1 trillion yuan in net liquidity in a weeklong span. Four of those weeks occurred in the months since September.
