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 7.2816
Like it says above, a 10+ big figure difference between the modelled estimate and the actual. This is the PBOC attempting to slow the fall of the RMB. The spread between the US 10-year and China 10 year government bonds has widened to 180bps. Widest since 2007. Its little wonder the yuan is dropping away .
PBOC injects 111bn yuan in open market operations (OMOs) via 7-day reverse repos (RRs) at an unchanged rate of 1.8%
- 204bn yuan of RRs mature today
- thus a net 93bn yuan drain on the day in OMOs
This article was written by Eamonn Sheridan at www.forexlive.com. Source