The People's Bank of China set 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.
- A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC.
- The previous close was 6.3866
- Friday's reference rate was 6.3825
The setting from the PBOC is significantly weaker for the CNY than was expected. Over the weekend the PBOC expressed a desire to slow the rise of the yuan:
PBOC injects 50bn yuan via 7-day reverse repos
10bn yuan mature today
thus a net 40bn drain in open market operations (OMO)