China has set a higher midpoint for the yuan in its peg to the US dollar today. Greenback has strengthened slightly against the yuan since the change, but this still marks an effort for a stronger yuan as the greenback heads a little lower.
Short-term downward pressure on the yuan is being somewhat relieved today by the adjustment Chinese policymakers have made in the midpoint for the yuan against the US dollar. The midpoint for the yuan (also called the renminbi) was set at 6.506 per dollar, marking an increase of strength by 0.26%.
With the greenback weakening a little on soft economic data and the expectations that the Federal Reserve will hold off on raising interest rates until June, rather than moving in April, the People’s Bank of China decided it’s time to give the yuan a little boost.
China is still expected to move toward a currency that floats more freely on the market in coming years, and adjustments in response to what’s happening in the markets now is part of that effort as the Chinese economy moves toward greater openness.
For now, the dollar is drifting a little higher against the yuan, with USD/CNY moving up to 6.5078 from the open at 6.5055.
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