Market News

Anticipated: China’s PBOC to Establish Yuan Midpoint at 7.1869

Yesterday, China’s People’s Bank of China (PBOC) set the USD/CNY central rate at 7.1380. The PBOC is responsible for determining the daily midpoint of the yuan (also known as renminbi or RMB). It is through a managed floating exchange rate system. This system allows the yuan’s value to fluctuate within a specific range. It is known as a “band” around the central reference rate or “midpoint.” Currently, the trading band is set at +/- 2%, but some experts speculate that it might be widened to 3% during the year.

China’s PBOC- USD/CNY central rate at 7.1380

Here’s how the process works:

Daily midpoint setting. Every morning, the PBOC establishes a midpoint for the yuan against a basket of currencies. It is with the US dollar as the primary component. This setting takes into account factors like market supply and demand, economic indicators, and fluctuations in the international currency market. The midpoint acts as a reference point for that day’s trading.
The trading band. The PBOC allows the yuan to move within a specified range around the midpoint. At present, the trading band is set at +/- 2%, implying that the yuan can appreciate or depreciate by a maximum of 2% from the midpoint during a single trading day. However, the PBOC has the authority to adjust the trading band based on economic conditions and policy objectives.
Intervention. If the yuan’s value approaches the limits of the trading band or experiences excessive volatility, the PBOC may intervene in the foreign exchange market by buying or selling the yuan. This intervention aims to stabilize the currency’s value and facilitate a controlled and gradual adjustment.
It’s essential to note that the PBOC’s management of the yuan’s exchange rate has sparked controversy. Some critics claiming that the central bank undervalues the currency to gain a trade advantage. However, in recent years, China has taken steps towards a more market-oriented exchange rate system, providing greater flexibility in determining the yuan’s value.

Stay Updated with the Market News.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Our Newsletter

Subscribe to ForexPropNews Trading Newsletters

Receive the best-curated content by our editors for the week ahead.

Mini Charts

Fidelcrest video review

Play Video

Related Articles

Euro Weighed Down as EU Inflation Falls Short of Predictions

Euro Area core inflation falls for the 7th straight month, missing forecasts,...

Yen and Euro in Focus: Wage Negotiations, ECB Meetings

Japanese yen falters as USD/JPY retreats ahead of wage negotiations; EUR/JPY finds...

Dollar Reaction to Inflation Figures and Unemployment Claims

Recent U.S. inflation and unemployment data led to mixed dollar movement, with...

Aussie Dollar Up on Retail Sales, Japan Sees Inflation Surprise

Aussie retail sales disappoint, Japan inflation jumps. Currencies & commodities face data,...

Featured educational content

EXPLORE MORE

Featured educational content

New to Forex? Learn to Read Charts Like a Pro

Dive into forex trading basics: chart reading, candlesticks, technical indicators, timeframes, currency pairs. Start your journey to trading success today!

Video: How I Re-Programmed My Mind to be a Consistent Trader (Thanks to The Wolf of Wall Street)

How I Re-Programmed My Mind to be a Killer Trader (Thanks to The Wolf of Wall Street)

Video: This Invisible Trading Indicator Tells you What Day Trade (Not Just Price)

This Invisible Trading Indicator Tells you WHEN to Trade (Not Just Where)

Technical Analysis: Chart Patterns and Indicators for Profitable Investments

Navigate stocks with confidence using chart patterns like Head and Shoulders, indicators such as MACD, and tools like trendlines. Master technical analysis for...

Latest News

Euro Down EU Inflation
Market News

Euro Weighed Down as EU Inflation Falls Short of Predictions

Euro Area core inflation falls for the 7th straight month, missing forecasts, while EUR/USD tests critical level at 1.0800.

Yen Wage Negotiations ECB Meetings
Market News

Yen and Euro in Focus: Wage Negotiations, ECB Meetings

Japanese yen falters as USD/JPY retreats ahead of wage negotiations; EUR/JPY finds support before ECB meeting next week.

Copyright © 2023 Forex Prop News. All Rights Reserved.