People's Bank of China sets the onshore yuan (CNY) reference rate for the trading session ahead.
- USD/CNY is 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.
- The previous close was 6.4558
- Reuters estimate was 6.4501. A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC. The cut in the rate by just under 200 pips from yestedra is the largest strengthening for the CNY at the setting since August 9.
- The CNY has risen to its highest on a trade-weighted basket basis since March 9 2016
PBOC injects 50bn yuan via 7-day reverse repos (rate 2.2%)
- and PBOC injects 50bn yuan via 14-day reverse repos (rate 2.35%)
- 10bn RRs mature today
- thus net 90bn injection on the day
The PBOC say the large injection of funds to the banking system is aimed at keeping liquidity stable towards quarter-end. Also of note are the long holidays coming up in China on October 1-7, Golden Week.
