PBOC Sets Firmer USD/CNY Fix at 7.0875, Maintains Ample Liquidity
Key Takeaways
China’s central bank guided the yuan stronger today, setting the USD/CNY midpoint at 7.0875, well below the market estimate of 7.1154. The firmer-than-expected daily fixing suggests the People’s Bank of China (PBOC) remains focused on stabilizing the currency amid shifting global dollar dynamics and domestic policy priorities.
Under China’s managed floating exchange rate regime, the onshore yuan trades within a ±2% band around the daily midpoint. Today’s fix also sits stronger than the previous onshore close at 7.1180, signaling tighter guidance to temper depreciation pressures. The move provides a clearer anchor for USD/CNY trading in the session ahead and reinforces policy intent to keep FX expectations orderly.
Alongside the FX setting, the PBOC injected CNY 375 billion through 7‑day reverse repos at an unchanged 1.40% rate, ensuring interbank liquidity remains well supplied. The combination of a supportive liquidity stance and a stronger midpoint underscores a dual-track approach: cushioning financial conditions while maintaining a steady hand on the renminbi. Traders, exporters, and importers will watch the intraday band and liquidity operations for cues on near-term yuan direction and funding costs.
Key Points – USD/CNY daily midpoint set at 7.0875 vs. a 7.1154 market estimate – Fix is stronger than the prior onshore close at 7.1180 – Onshore yuan trades within a ±2% band around the daily fixing – PBOC conducted CNY 375bn in 7-day reverse repos at 1.40% (unchanged) – Actions indicate a preference for yuan stability alongside ample liquidity
