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Why does China fiddle around with the yuan fixing again?

Regional perspectives

BNP Paribas Asset Management
 

The PBoC adjusted the renminbi (or yuan) fixing mechanism for the second time on 20 February. The first time was in August 2015 when it changed the calculation from using a 10-day moving average of the CNY-USD’s closing rates to using the CNY-USD’s closing rate of the previous trading day.

There are three parts to the renminbi fixing:

1. The CNY-USD’s spot closing rate as of 4:30pm of the previous trading day.
2. The average of the 24-hour daily changes in the USD against the currencies in the CFETS basket, the BIS CNY basket and the IMF SDR basket.
3. A PBoC discretionary adjustment based on its judgement on the FX market’s demand and supply conditions, risk appetite and international developments.

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