The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan, also known as the renminbi (RMB). The PBOC operates a managed floating exchange rate system that allows the yuan’s value to fluctuate within a predefined range, or “band,” set at plus or minus 2% around the central reference rate, known as the midpoint.
The previous closing rate of the yuan was 7.0710.
On the liquidity front, the PBOC injected 139.8 billion yuan through 7-day reverse repurchase agreements (reverse repos) at an unchanged interest rate of 1.40%. However, after accounting for maturities today, the net effect on liquidity is a drain of 162 billion yuan.
In related economic news, China’s debt crackdown is pushing local government financing vehicles (LGFVs) into more expensive shadow loans, which has revived concerns about hidden financial risks. Additionally, U.S. Trade Representative Greer has called for a smaller, more balanced trade relationship with China and tighter enforcement of the United States-Mexico-Canada Agreement (USMCA).
Original Source: Eamonn Sheridan of investinglive.com
