China’s yuan shows weakening against US dollar on Tuesday
Date
6/25/2024 8:06:25 AM
(MENAFN) On Tuesday, the central parity rate of the Chinese currency renminbi (yuan) weakened slightly by 24 pips to 7.1225 against the U.S. dollar, as reported by the China Foreign Exchange Trade System. This adjustment reflects the ongoing dynamics in China's foreign exchange market, where the yuan's exchange rate is allowed to fluctuate within a managed float system. Specifically, the yuan can rise or fall by up to 2 percent from the central parity rate set each trading day.
The central parity rate itself is determined by the China Foreign Exchange Trade System based on a weighted average of prices provided by market makers before the opening of the interbank foreign exchange market every business day. This process ensures that the central bank maintains a measure of control over the currency's exchange rate while allowing market forces to play a role in its valuation.
The movement in the central parity rate influences market expectations and trading activities involving the yuan against the U.S. dollar. It serves as a crucial reference point for financial institutions, businesses, and investors in their transactions and hedging strategies related to the Chinese currency. As such, fluctuations in the central parity rate are closely monitored as indicators of broader economic conditions and policy intentions in China's financial markets.
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