China’s yuan shows weakening against US dollar on Thursday

(MENAFN) China's currency, the renminbi, commonly known as the yuan, saw a slight depreciation against the U.S. dollar on Thursday, as reported by the China Foreign Exchange Trade System. The central parity rate of the yuan dipped by 5 pips to reach 7.1111 against the dollar. This adjustment is within the framework of China's managed float exchange rate system, where the yuan's value in the spot foreign exchange market is permitted to fluctuate within a designated band of 2 percent around the central parity rate on any given trading day.

The central parity rate, serving as a reference point for the yuan's value against the U.S. dollar, is determined based on a weighted average of prices provided by market makers. These prices are collected before the commencement of trading in the interbank market each business day. This mechanism allows for a transparent and market-oriented approach to setting the yuan's exchange rate, while also providing a degree of stability by preventing excessive fluctuations.

The adjustment in the central parity rate reflects various factors influencing the exchange rate dynamics between the yuan and the U.S. dollar, including market demand and supply, macroeconomic conditions, and policy considerations. The People's Bank of China, the country's central bank, closely monitors these factors to ensure the stability and competitiveness of the yuan in the global currency market.

Overall, the adjustment in the central parity rate underscores China's commitment to maintaining a flexible yet controlled exchange rate regime, aimed at fostering economic stability and facilitating international trade and investment.



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