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 7.3115
The modelled estimate was 7.3174, which means the differential to the actual is a new record high 1447 points.
Also, the difference between yesterday's close and the reference rate setting is close to 2%. Check out the bullet points a few lines above, the People's Bank of China is going to be close to mandatory intervention in the USD/CNY market if trades take place above (7.1727*1.02 =) 7.3162. This could be an interesting session.
PBOC injects 378bn in open market operations (OMOs) via 14-day RR, sets rate at 1.95%
- 208bn yuan of RRs mature today
- thus a net 170bn yuan injection on the day in OMOs
The 14-dayers will be helpful providing liquidity over the week-long holiday coming up: