PBOC sets USD/ CNY reference rate for today at 6.8487 (vs. estimate at 6.8087)

What the desk is arguing

The desk frames this as a deliberate move by the PBOC to navigate the complexities of a slowing economy while managing currency stability. The higher reference rate suggests that the central bank is willing to allow some depreciation of the yuan to support growth, particularly in export-driven sectors.

Supporting this view, the PBOC's liquidity injection of 27 billion yuan indicates an ongoing effort to ensure sufficient market liquidity, which is crucial for economic stability. This aligns with the central bank's recent trend of using reverse repos as a tool to manage short-term interest rates and support the economy.

Where it sits in our coverage

Our consensus target for USD/CNY is set at 6.95, with a range of 6.80 to 7.10. Notable firm targets include: - jpmorgan: 6.95 (Mar-26) - bofa: 7.05 (Mar-26) - citi: 6.90 (Mar-26)

This view is slightly above the consensus, indicating that the desk expects a marginally weaker yuan than some peers, particularly bofa, which is positioned at the higher end of the range.

How other firms see it

Firms aligned with our view include jpmorgan and citi, both anticipating a weaker yuan trajectory in the coming months. Conversely, bofa presents a more cautious outlook, expecting less depreciation than our desk's position.

Key related currency pairs to monitor include EUR/CNY, as shifts in the eurozone's economic performance could influence yuan dynamics. Additionally, the trajectory of USD/JPY may provide insights into broader market sentiment affecting the yuan.

What the calendar says

With no upcoming calendar events specific to the PBOC or USD/CNY, traders should focus on the broader economic indicators and central bank communications that could impact market sentiment in the near term.