In a recent development, the central parity rate of the Chinese currency, the renminbi (yuan), experienced a decline of 97 pips against the US dollar. According to the China Foreign Exchange Trade System, the rate now stands at 7.1212 yuan to the dollar as of Monday.
China’s spot foreign exchange market allows the yuan to fluctuate within a two percent margin in relation to the central parity rate on a daily basis. This mechanism enables the currency to either strengthen or weaken against the dollar.
The central parity rate is determined by calculating a weighted average of prices provided by market makers prior to the opening of the interbank market each business day. It serves as a reference point for the yuan’s exchange rate against the US dollar.