Headline: PBOC Sets Stronger Yuan Fix at 7.0865, Adds Liquidity to Support Markets
Introduction: China’s central bank set a firmer yuan guidance on Thursday and injected fresh short-term funds into the banking system, signaling continued focus on currency stability and smooth market liquidity.
The People’s Bank of China fixed the USD/CNY midpoint at 7.0865, stronger than the market estimate of 7.1156 and below the previous close of 7.1125. The daily reference rate anchors onshore yuan trading within a managed float, allowing the currency to move up to 2% around the midpoint. A stronger-than-expected fix typically indicates the central bank’s preference for a steadier renminbi against the US dollar, providing a stabilizing cue for FX markets.
Alongside the stronger yuan fixing, the PBOC injected 190 billion yuan through 7-day reverse repo operations at an unchanged 1.40% rate. After accounting for maturities, the net liquidity addition totaled 97.2 billion yuan. The move helps maintain orderly interbank conditions and supports funding while the central bank guides USD/CNY through its daily midpoint mechanism.
Key Points: – USD/CNY daily fix set at 7.0865, stronger than the 7.1156 market estimate – Prior onshore close: 7.1125 – Yuan trades within a +/-2% band around the PBOC midpoint under China’s managed float – PBOC injected 190bn yuan via 7-day reverse repos at 1.40% – Net liquidity injection after maturities: 97.2bn yuan – Actions underscore focus on currency stability and ample market liquidity
