(MENAFN) The Chinese yuan experienced a slight depreciation against the U.S. dollar during Monday's trading session, with the central parity rate sliding 20 pips to settle at 7.0856, data from the China Foreign Exchange Trade System revealed.

The modest decline reflects ongoing currency adjustments as China's monetary authorities navigate complex economic conditions and fluctuating global market pressures.

Under China's managed currency framework, the yuan operates within strictly defined parameters in the nation's spot foreign exchange market. Trading regulations permit the currency to fluctuate by up to 2 percent in either direction from the established central parity rate throughout each trading day, providing a controlled band for market-driven price discovery.

The central parity rate itself represents a critical benchmark for yuan valuation. This reference point is calculated using a weighted average methodology that incorporates prices submitted by designated market makers prior to the commencement of interbank market operations each business day. The system is designed to balance market forces with regulatory oversight, allowing authorities to maintain influence over currency movements while permitting some degree of market responsiveness.

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