China’s yuan strengthens to 7.1318 over US dollar on Tuesday

(MENAFN) On Tuesday, the central parity rate of the Chinese renminbi, commonly known as the yuan, appreciated by 27 pips, reaching 7.1318 against the U.S. dollar. This rate was announced by the China Foreign Exchange Trade System and reflects the official exchange rate set for the yuan in relation to the dollar. The central parity rate is calculated based on a weighted average of prices provided by market makers before the opening of the interbank market each business day, serving as a benchmark for currency transactions.

In the Chinese spot foreign exchange market, the yuan is allowed to fluctuate within a 2 percent range above or below this central parity rate each trading day. This fluctuation band is designed to accommodate daily market fluctuations while maintaining a degree of stability in the currency's value. The movement of the yuan within this band reflects the interplay of supply and demand in the foreign exchange market, influenced by various economic factors and market conditions.

The adjustment of the central parity rate is an important tool used by the People's Bank of China to manage the stability of the yuan and to guide market expectations. By setting this rate, the central bank aims to ensure that the yuan remains stable and to provide a reference point for foreign exchange transactions, thus facilitating smoother international trade and investment activities.

The strengthening of the yuan against the dollar can have significant implications for China's economy, influencing everything from export competitiveness to inflation rates. As such, the central parity rate serves as a crucial indicator of the currency's value and plays a key role in China's monetary policy and economic strategy.

MENAFN06082024000045015839ID1108521454