People's Bank of China set the onshore yuan (CNY) reference rate for the trading session ahead.
- 6.9305 is the weakest onshore yuan setting since August 18 of 2020
- 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 6.9971
The PBOC injects 2 yuan via 7-day reverse repos (rate remains at 2.0%)
- 2bn yuan mature today
- thus a net neutral in OMOs today
The offshore yuan weakened beyond 7 to the USD.
- The USD is so strong, has been for months.
- Add in China capital flight flows (not a cascade yet but its building) as headwinds for the CNH against the USD.