PBOC sets USD/ CNY reference rate for today at 7.0202 (vs. estimate at 7.0212)

Earlier, a People’s Bank of China rate cut:

• PBOC 1-year Medium-term Lending Facility (MLF), rate cut to 2% (2.3% previously)

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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 7.0318

In open market operations (OMOs):

• PBOC injects 196.5bn via 14-day RR, rate at 1.85%
• 568 bn yuan reverse repo loans expire today
• net 372 bn liquidity drained from market in OMOs (note the MLF above)

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