(MENAFN) As reported by the China Foreign Exchange Trade System, the central parity rate of the Chinese currency renminbi, also known as the yuan, exhibited a slight strengthening on Tuesday, increasing by 3 pips to reach 7.1063 against the U.S. dollar. This adjustment in the central parity rate plays a significant role in guiding the exchange rate movements of the yuan in China's spot foreign exchange market.
In China's spot foreign exchange market, the yuan is subject to a daily fluctuation band of 2 percent around the central parity rate established by the authorities. This means that the yuan is permitted to appreciate or depreciate within this predetermined range relative to the U.S. dollar on each trading day, reflecting market dynamics and macroeconomic factors.
The central parity rate of the yuan against the U.S. dollar is determined based on a weighted average of prices quoted by market makers before the commencement of trading in the interbank market each business day. This mechanism is designed to ensure stability and fairness in the foreign exchange market by incorporating input from multiple market participants and reflecting prevailing supply and demand conditions for the yuan relative to the U.S. dollar.
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