Headline: PBOC Sets Stronger Yuan Fix at 7.0872, Bolsters Liquidity With Reverse Repos
The People’s Bank of China set a firmer USD/CNY central parity rate at 7.0872, stronger than the market estimate of 7.1121, signaling a tighter anchor for the renminbi at the start of the trading day. Alongside the fixing, the central bank enhanced liquidity conditions through open-market operations to keep funding markets steady.
China operates a managed float for the yuan, allowing onshore USD/CNY to trade within a band—currently at plus or minus 2%—around the daily midpoint. Today’s stronger-than-expected fixing suggests a preference to temper depreciation pressures and guide FX expectations after a previous onshore close around 7.1074. The move will likely frame intraday FX dynamics for both onshore and offshore yuan markets.
To support money market stability, the PBOC conducted 7-day reverse repurchase operations at 1.40%, injecting 310.5 billion yuan. After accounting for maturities, the net addition stands at 115 billion yuan. The liquidity injection helps smooth settlement needs and reinforces broader financial conditions as the central bank balances exchange-rate management with domestic funding demands.
Key Points: – USD/CNY daily midpoint fixed at 7.0872, stronger than the 7.1121 estimate. – Onshore yuan trades within a +/-2% band around the PBOC’s central parity rate. – Previous onshore USD/CNY close was approximately 7.1074. – PBOC injected 310.5 billion yuan via 7-day reverse repos at 1.40%. – Net liquidity addition totaled 115 billion yuan after maturities. – Actions aim to stabilize FX expectations and maintain smooth interbank funding.
