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 7.1528
7.1132 is the strongest for the onshore yuan since June 9.
PBOC will auction CNY 5.0bln in central bank bill swaps today
PBOC injects 415bn via 7-day RR, sets rate at an unchanged 1.8%
- 193bn yuan of RRs mature today
- thus a net 96bn yuan injection 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.
This article was written by Eamonn Sheridan at www.forexlive.com. Source