China’s yuan depreciates to 7.1342 over US dollar on Wednesday


(MENAFN) On Wednesday, the China Foreign Exchange Trade System reported that the central parity rate of the Chinese currency, the renminbi or yuan, depreciated by 32 pips to 7.1342 against the U.S. dollar. This adjustment reflects the daily recalibration of the yuan's value in China's spot foreign exchange market, where the currency is allowed to fluctuate within a 2 percent band relative to its central parity rate on any given trading day.

The central parity rate itself is determined by calculating a weighted average of prices quoted by market makers just ahead of the interbank market opens each business day. This methodology ensures that the exchange rate is anchored to market conditions while providing a benchmark for trading activities throughout the day. By allowing for modest fluctuations around this reference rate, Chinese authorities aim to maintain stability in the currency market while also allowing the exchange rate to adjust gradually in response to economic factors in addition to market dynamics.

This mechanism is part of China's broader strategy to manage its currency in a controlled as well as predictable manner, balancing the goals of promoting stability in international trade and investment while allowing the yuan to reflect underlying economic fundamentals over time.

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