FX.co ★ Offshore Yuan Holds Near 1-Month Low

The offshore yuan held steady around 6.81 per dollar on Thursday, trading near a one-month low after the People’s Bank of China announced plans to introduce overnight reverse repo operations as the next step in its monetary policy reform. The central bank said it will conduct overnight reverse repurchase operations on June 29–30, offering fixed-rate overnight liquidity to more effectively meet short-term funding needs in the banking system. This new overnight reverse repo rate will sit alongside the existing seven-day rate of 1.4%, bringing the PBOC’s policy framework more in line with major global central banks such as the US Federal Reserve. Speaking at the Lujiazui Forum, Governor Pan Gongsheng detailed the central bank’s intention to expand the use of overnight reverse repos. Externally, the yuan continued to face downward pressure from a stronger US dollar, amid mounting market expectations of additional Federal Reserve interest rate hikes later this year.