Chinese yuan slightly weakens against US dollar on Tuesday
(MENAFN) On Tuesday, the Chinese currency renminbi, colloquially referred to as the yuan, experienced a marginal weakening as its central parity rate against the U.S. dollar dipped by 19 pips to 7.0957, according to data from the China Foreign Exchange Trade System.
Within China's spot foreign exchange market, the yuan operates under a managed floating exchange rate system, allowing it to fluctuate within a predetermined band relative to the central parity rate. This band typically permits the yuan to rise or fall by up to 2 percent from the central parity rate on any given trading day, providing a degree of flexibility to accommodate market dynamics.
The central parity rate of the yuan vis-à-vis the U.S. dollar is computed based on a weighted average of prices submitted by market makers before the commencement of trading in the interbank market each business day. This rate serves as a benchmark for currency trading activities and helps guide market participants in determining exchange rates for transactions involving the yuan.
This slight adjustment in the central parity rate reflects the interplay of various factors influencing currency markets, including changes in global economic conditions, monetary policy adjustments, and fluctuations in supply and demand dynamics for the yuan. As such, it underscores the dynamic nature of foreign exchange markets and the ongoing efforts to maintain stability while allowing for market-driven adjustments.
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