The Chinese yuan fell slightly on Tuesday, with the central parity rate slipping by 13 basis points to 7.1418 against the U.S. dollar, according to data from the China Foreign Exchange Trade System (CFETS).
The adjustment underscores persistent currency market volatility as the yuan faces mild depreciation pressure. Analysts say the movement reflects a blend of domestic monetary policy considerations and external forces, including the U.S. dollar’s continued strength, shifting global capital flows, and changing investor risk appetite.
Under China’s managed floating exchange rate regime, the yuan is allowed to trade within a two per cent band above or below the daily central parity rate in the onshore spot market. That rate is determined each morning by CFETS using a weighted average of quotes submitted by designated market makers before interbank trading begins.
The CFETS explained that this mechanism is aimed at allowing market supply and demand to play a larger role in exchange rate formation, while maintaining overall stability within a “controllable” range.
Currency strategists note that although recent movements remain moderate compared to past episodes of volatility, persistent global economic uncertainties including weaker growth outlooks in major economies, geopolitical tensions, and the Federal Reserve’s policy trajectory could exert further pressure on the yuan in the weeks ahead.
By Adekunle Munir
The Chinese yuan fell slightly on Tuesday, with the central parity rate slipping by 13 basis points to 7.1418 against the U.S. dollar, according to data from the China Foreign Exchange Trade System (CFETS).
The adjustment underscores persistent currency market volatility as the yuan faces mild depreciation pressure. Analysts say the movement reflects a blend of domestic monetary policy considerations and external forces, including the U.S. dollar’s continued strength, shifting global capital flows, and changing investor risk appetite.
Under China’s managed floating exchange rate regime, the yuan is allowed to trade within a two per cent band above or below the daily central parity rate in the onshore spot market. That rate is determined each morning by CFETS using a weighted average of quotes submitted by designated market makers before interbank trading begins.
The CFETS explained that this mechanism is aimed at allowing market supply and demand to play a larger role in exchange rate formation, while maintaining overall stability within a “controllable” range.
Currency strategists note that although recent movements remain moderate compared to past episodes of volatility, persistent global economic uncertainties including weaker growth outlooks in major economies, geopolitical tensions, and the Federal Reserve’s policy trajectory could exert further pressure on the yuan in the weeks ahead.
