China’s yuan drops to 7.1098 over US dollar on Thursday
Date
5/23/2024 5:52:04 AM
(MENAFN) On Thursday, the China Foreign Exchange Trade System reported a minor adjustment in the central parity rate of the Chinese currency renminbi, commonly referred to as the yuan. The rate experienced a marginal weakening, declining by 21 pips to reach 7.1098 against the U.S. dollar. This adjustment is indicative of the ongoing dynamics within China's foreign exchange market, where factors such as supply and demand, market sentiment, and external economic conditions influence the value of the yuan relative to the U.S. dollar.
In China's spot foreign exchange market, the yuan operates within a daily trading band, allowing for fluctuations within a 2 percent range, both upward and downward, from the central parity rate. This mechanism provides flexibility for the yuan's valuation, enabling it to respond to market forces while maintaining stability within a predefined range. The daily adjustment in the central parity rate serves as a reference point for currency trading activities, guiding market participants in their transactions.
The central parity rate of the yuan against the U.S. dollar is determined based on a weighted average of prices offered by market makers before the opening of the interbank market each business day. This calculation methodology ensures that the central parity rate accurately reflects prevailing market conditions, incorporating input from various financial institutions and market participants. As such, it serves as a crucial benchmark for currency trading activities within China's foreign exchange market, providing guidance for market participants and contributing to overall market stability.
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