Today, China’s Foreign Exchange Trading System (CFETS) announced that the median exchange rate for the yuan has been established at 7.1056 yuan per US dollar, indicating a slight strengthening of 0.0002 yuan compared to the previous rate.
Under China’s foreign exchange market regulations, the yuan is permitted to fluctuate within a daily band of 2% around the median trading rate. This means that the currency can appreciate or depreciate by up to 2% from the median rate each day, providing a degree of flexibility while maintaining stability in the exchange rate.
The determination of the yuan’s median exchange rate against the US dollar is based on a weighted average price calculated before the interbank market opens for trading each day. This rate serves as a benchmark for currency trading activities and helps guide market participants in their transactions.
The setting of the yuan’s median appreciation rate underscores China’s commitment to managing its currency within a controlled framework, balancing considerations of market dynamics and economic stability. As China continues to play a significant role in the global economy, developments in the yuan’s exchange rate remain closely monitored by investors and policymakers alike.