The PBoC adopts the overnight reverse repo as its primary policy rate, signaling a technical alignment that Commerzbank expects will underpin a mid-term appreciation trend for the Chinese Yuan.
Commerzbank anticipates a gradual appreciation of the Chinese Yuan against the US Dollar, driven primarily by PBoC policy guidance rather than interest rate differentials. The shift in the operational policy rate from the 7-day to the overnight reverse repo at 1.25% aligns with market expectations and actual money-market usage, supporting a bearish outlook for the USD/CNY pair.
The PBoC is shifting its operational policy rate to the overnight reverse repo, set at 1.25%.
Commerzbank expects a gradual appreciation of the CNY, driven by PBoC policy guidance.
The People's Bank of China is transitioning its operational policy rate from the 7-day to the overnight reverse repo to better reflect money-market conditions. Commerzbank analysts anticipate this move will support a gradual appreciation of the Chinese Yuan as the central bank continues to exert firm guidance over the currency.
The shift to the overnight reverse repo aligns the official policy rate with actual money-market usage and previous testing levels.