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The People of China USD/CNY reference rate is worth 0115 GMT.
The Chinese People’s Bank (PBOC), the Chinese Central Bank, is responsible for setting the daily medium point of the yuan (also known as Renminbi or RMB). PBOC follows the orbit floating drainage system that allows the value of the yuan to fluctuate within a specific range, called “the range”, around a central reference rate, or “mid point”. It is currently at +/- 2 %.
How does the process work:
- Preparing the daily medium point: Every morning, PBOC puts the mid -yuan point against a basket of currencies, especially the US dollar. The central bank takes into account factors such as market supply, demand, economic indicators, and international currency market fluctuations. The center point works as a reference point for that day trading.
- Trading tape: PBOC allows the yuan to move within a specific range around the center point. The trading range is set on +/- 2 %, which means that the yuan can be estimated or decreased by a maximum of 2 % from the center point during one trading day. This range is subject to change by PBOC based on economic conditions and policy goals.
- Intervention: If the value of the yuan is close to limiting the scope of trading or facing excessive fluctuations, PBOC may interfere in the foreign exchange market by buying or selling the yuan to achieve stability in its value. This helps to maintain controlled adjustment and graduate the value of the currency.
