China’s yuan shows strengthening against US dollar on Monday

(MENAFN) On Monday, the central parity rate of the Chinese currency, renminbi (or yuan), saw an appreciation, strengthening by 219 pips to 7.1139 against the U.S. dollar, as reported by the China Foreign Exchange Trade System. This adjustment reflects the value of the yuan in the foreign exchange market and highlights its performance relative to the U.S. dollar.

In the spot foreign exchange market in China, the yuan is permitted to fluctuate within a 2 percent range above or below the central parity rate on a daily basis. This trading band allows for some flexibility and responsiveness to market conditions, while still providing a structured approach to currency valuation.

The central parity rate itself is determined each business day before the interbank market opens. It is calculated based on a weighted average of the prices offered by market makers. This method ensures that the rate reflects a comprehensive view of market sentiment and trading conditions before the start of daily transactions.

Overall, the central parity rate serves as a benchmark for the yuan's value in the forex market, guiding its trading range and providing a reference point for market participants. The daily adjustment mechanism aims to balance the currency's stability with the need for responsiveness to economic and market developments.

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