People’s Bank of China Sets Daily Midpoint for Yuan
The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a “band,” around a central reference rate, or “midpoint.” The current band is set at +/- 2%.
The PBOC sets the midpoint each morning around 0115 GMT. The midpoint is used as a reference point for the yuan’s trading throughout the day. The yuan is allowed to trade within a certain range around the midpoint, but the PBOC can intervene in the market to prevent the yuan from moving outside of this range.
The PBOC’s decision on the midpoint is based on a number of factors, including the economic outlook, the value of the yuan against other currencies, and the level of foreign reserves. The PBOC typically sets the midpoint in a way that it believes will help to stabilize the yuan’s value and promote economic growth.
