The PBOC has just announced the yuan’s fixing level for Friday, and it’s stronger than where it closed yesterday.
The USD/CNY rate was set at 6.3974, below the 6.3990 level that it closed on Thursday.
Yesterday the PBOC fixed the yuan at 6.4010. At 6.3975, it has strengthened by 0.05% against the US dollar.
Over the prior three sessions the rate was set weaker against the US dollar compared to the previous day’s fixing level.
Friday’s fix, in line with where the USD/CNY exchange rate closed on Thursday, fits with recent communication from the PBOC that it will allow market forces to play a greater role in setting the yuan’s opening level.
On Tuesday the PBOC announced a change the to the methodology used to determine the yuan’s trading level. Instead of the bank solely determining the fixing rate, it announced that market participants, using the previous days closing level, would now play a greater role in determining the yuan’s initial trading level.
The market reaction to the figure announced today has been negligible – it appears markets are becoming far more comfortable with the PBOC’s new currency regime.
Major currency pairs are largely unchanged as are regional stock markets.
In China, after 5 minutes of trade, the benchmark Shanghai Composite index has risen 0.4%.
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