Chinese yuan weakens against US dollar in foreign exchange market
(MENAFN) According to the China Foreign Exchange Trade System, the central parity rate of the Chinese currency renminbi, commonly known as the yuan, experienced a slight weakening on Wednesday, dropping by 14 pips to 7.1097 against the U.S. dollar. This adjustment reflects the ongoing fluctuations in the exchange rate dynamics between the yuan and the dollar within the Chinese foreign exchange market.
In China's spot foreign exchange market, the yuan is subject to a managed floating exchange rate system, allowing it to fluctuate within a certain range against the U.S. dollar. Specifically, the yuan is permitted to rise or fall by up to 2 percent from the central parity rate established by the China Foreign Exchange Trade System on each trading day.
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 prior to the commencement of trading in the interbank market each business day. This mechanism aims to ensure a stable and transparent exchange rate regime, while also reflecting market dynamics and the supply-demand conditions for the yuan in the foreign exchange market.
The slight depreciation of the yuan against the U.S. dollar underscores the intricate interplay of factors influencing currency valuations, including economic indicators, market sentiment, and global geopolitical developments. As market participants closely monitor exchange rate movements, the central parity rate serves as a key reference point for market expectations and trading activities in the Chinese foreign exchange market.
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