The People’s Bank of China’s benchmark US dollar/renminbi rate is scheduled to be announced around 0115 GMT (1:15 p.m. Japan time).
China’s central bank, the People’s Bank of China (PBOC), is responsible for setting the daily midpoint for the Renminbi (also known as the Renminbi or RMB). The People’s Bank follows a managed floating exchange rate system that allows the value of the renminbi to fluctuate within a certain range called a “band” around a central reference rate or “midpoint.” Currently it is +/- 2%.
How the process works:
- Setting the daily midpoint: Every morning, the People’s Bank sets the midpoint of the Renminbi against a basket of currencies, primarily the US dollar. Central banks consider factors such as market demand and supply, economic indicators, and fluctuations in international currency markets. The midpoint serves as the reference point for the day’s trading.
- Trading band: The central bank allows the renminbi to move within a certain range around the midpoint. The trading width is set at +/-2%, meaning the renminbi can rise or fall by up to 2% from the midpoint during a single trading day. This range is subject to change by the People’s Bank based on economic conditions and policy objectives.
- Intervention: When the value of the renminbi approaches the limits of its trading range or experiences excessive fluctuations, the People’s Bank may intervene in the foreign exchange market by buying or selling renminbi to stabilize the value of the renminbi. There is sex. This helps maintain a controlled gradual adjustment of the currency’s value.
China’s PMI is still to come:
—
There are two major Purchasing Managers Index (PMI) surveys in China: the official PMI published by the National Bureau of Statistics (NBS) and the Caixin China PMI published by media company Caixin and research firm Markit/S&P Global. It is.
- The official PMI survey targets large enterprises and state-owned enterprises, while the Caixin PMI survey targets small and medium-sized enterprises. As a result, Caixin PMI is considered a more reliable indicator of China’s private sector performance.
- Another difference between the two studies is their methodology. The Caixin PMI survey uses a broader sample of companies than the official survey.
- Despite these differences, the two studies often find similar results regarding Chinese manufacturing.
https://www.forexlive.com/centralbank/pboc-is-expected-to-set-the-usdcny-reference-rate-at-71242-reuters-estimate-20241031/