PBOC sets USD/ CNY reference rate for today at 7.0101 (vs. estimate at 7.0093)

Earlier:

• PBOC cuts 7 day reverse repo rate to 1.5% (prior 1.7%)
• People’s Bank of China cuts RRR by 50bp

Also, as you’ll note below, the 14-day reverse repo rate has been cut to 1.65%, from 1.85%.

The cuts were promised earlier this week. I’m wary of a ‘sell the fact’ response today,

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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 7.0110

In open market operations (OMOs):

• PBOC injects 333bn via 14-day RR, sets rate at 1.65%, lowered from 1.85%

• 572 bn yuan reverse repo expire today
• net 239bn liquidity drained from the market in OMOs today

This article was written by Eamonn Sheridan at www.forexlive.com.