The People’s Bank of China decided on Wednesday morning to set the exchange rate of the yuan against the US dollar at the level of 7.1307 yuan per dollar, and expectations were to record 7.1303 yuan, while the pair closed yesterday’s session 7.1297 yuan, and the bank pumped 258 billion yuan within the repurchase operations in the markets for 7 days, with a return of 1.7%.
It should be noted that the Bank of China influences the price of the US dollar by pegging the value of its currency (yuan) to the dollar USD, as the bank uses a fixed exchange rate policy, which differs from the free exchange rate used by the United States and many other countries, while leaving a margin of movement for China’s currency to move in a narrow range.
The Bank of China manages the yuan’s value by keeping it fixed against a basket of currencies of countries that are partners of China, and the basket is measured at the dollar rate USD given that the United States is the Republic of China’s largest trading partner.
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