The central parity rate of the Chinese currency, the yuan (renminbi), fell by 25 pips to 7.1384 against the U.S. dollar on Wednesday, according to the China Foreign Exchange Trade System.
In the country’s spot foreign exchange market, the yuan is permitted to fluctuate by up to two per cent above or below the central parity rate each trading day.
Under China’s floating exchange rate system, the yuan is permitted to fluctuate by up to 2 per cent in the direction from the daily central parity rate in the spot foreign exchange market.
Chinese analysts note that the yuan’s movement comes against a backdrop of cautious global financial markets, with investors closely monitoring China’s economic indicators and potential stimulus measures from Beijing.
The daily reference rate is determined using a weighted average of quotes submitted by market makers before the interbank market opens.
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