Chinese Yuan Edges Down Against U.S. Dollar

(MENAFN) The Chinese currency renminbi—commonly known as the yuan—depreciated marginally Tuesday, with its central parity rate slipping 9 pips to settle at 7.0773 versus the U.S. dollar, official data from the China Foreign Exchange Trade System confirmed.

China's regulated spot foreign exchange market operates within strict parameters established by monetary authorities. The yuan maintains a daily trading band permitting fluctuations of 2 percent in either direction from the officially designated central parity rate, providing controlled flexibility while preventing excessive volatility.

The mechanism behind the central parity rate calculation involves sophisticated market dynamics. Each business day before interbank market operations commence, designated market makers submit price quotations to authorities. The central parity rate against the dollar emerges from a weighted average of these submitted prices, reflecting collective market sentiment and positioning.

This daily fixing process serves as the benchmark reference point for all yuan-dollar transactions throughout the trading session, establishing the parameters within which currency traders and commercial entities must operate. The system balances market forces with regulatory oversight, a hallmark of China's managed exchange rate regime that authorities utilize to maintain financial stability while gradually liberalizing currency markets.

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