On Thursday morning, the People’s Bank of China decided to set the exchange rate of the yuan against the US dollar at the level of 7.1228 yuan per dollar, and expectations were to record 7.1226 yuan, and the closing price of the pair yesterday’s session reached 7.1300 yuan, and the bank pumped 50.44 billion yuan within the repurchase operations in the 7-day markets, 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 – the 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. The basket is measured at the dollar dollar rate USD given that the United States is China’s largest trading partner.
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