The People’s Bank of China (PBOC) set the USD/CNY central rate at 7.1048 for Friday. This is a slight change from the previous rate of 7.1102 and is lower than the Reuters estimate of 7.1329. The PBOC’s goals are to keep prices stable, manage exchange rates, and support economic growth and market development. The bank is owned by the People’s Republic of China and is strongly influenced by the Chinese Communist Party.

Monetary Policy Tools

China’s central bank uses various tools for monetary policy. These include the seven-day Reverse Repo Rate and the Loan Prime Rate, which affect interest rates on loans and savings. Changes in these rates can also influence the value of the Chinese Renminbi. Nineteen private banks operate within China’s state-driven financial sector. Among the largest are digital banks WeBank and MYbank, both connected to tech giants Tencent and Ant Group. Market analyses have noted shifts in different currencies, commodities, and cryptocurrencies. Key mentions include the USD, GBP, and gold. Concerns about ongoing US tariffs and their role in foreign policy have also been highlighted. The People’s Bank of China has fixed a strong rate for the yuan to prevent it from weakening against the dominant US dollar. This action on October 10, 2025, indicates that policymakers are actively managing the yuan’s value, showing their aim to support the currency in the near term.

Global Market Influence

This decision follows recent data indicating some weakness in the Chinese economy, with September’s industrial production growth at 4.1% year-over-year, which was below market expectations. Throughout 2024, the PBOC has used strong fixes like this to bolster confidence and deter speculation during uncertain times. It’s a deliberate effort to show stability. However, this policy faces challenges from a strong US dollar. The dollar’s strength is driven by expectations that the Federal Reserve will keep interest rates high, with US 10-year Treasury yields around 4.8%. This creates tension between the Fed’s aggressive stance and the PBOC’s focus on stability. For traders, this implies that the upward movement of the USD/CNY pair may be limited in the coming weeks. Strategies that take advantage of a range-bound currency, like selling out-of-the-money call options on USD/CNH, might be worth considering. The conflicting pressures could also lead to short-term volatility, making options that profit from price swings appealing. We should also pay attention to currencies linked to China’s economy, such as the Australian dollar (AUD). A stable yuan generally supports the AUD, so buying call options on AUD/USD could be a smart trade. This allows for taking a position on Chinese stability without directly engaging in the yuan market. Nonetheless, gold’s price, just below recent highs around $4,000, indicates ongoing global risk aversion. While the PBOC’s actions may stabilize part of the market, broader concerns driven by US policies and geopolitical tensions persist. Any bullish positions should be managed with care. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now