(MENAFN) China's currency experienced a slight decline against the greenback on Monday as monetary authorities established a lower reference point for daily trading, according to official exchange data from the China Foreign Exchange Trade System.

The yuan's central parity rate—the official midpoint set by regulators—dropped 15 pips to settle at 7.0764 versus the U.S. dollar, the trading system reported. This adjustment reflects the ongoing currency dynamics between the world's two largest economies as financial markets navigate global economic uncertainties.

Under China's tightly managed currency framework, the renminbi operates within strict parameters established by regulators. The spot foreign exchange market permits the yuan to fluctuate within a controlled band, allowing movement of up to 2 percent in either direction from the officially designated central parity rate during each trading session.

Monetary authorities calculate this critical benchmark rate using a sophisticated methodology. The central parity rate against the dollar derives from a weighted average of quotations submitted by designated market makers before interbank trading commences each business day, ensuring the rate reflects current market conditions while maintaining regulatory oversight.

This daily rate-setting mechanism gives China's central bank significant influence over currency valuation while allowing limited market-driven price discovery within predetermined boundaries.

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