Exclusive: China asks banks to suspend counter-cyclical factor in yuan fixing


© Reuters. FILE PHOTO: A clerk of ICBC bank counts Chinese one hundred Yuan Banknotes as she poses for camera during a photo opportunity at its branch in Beijing

SHANGHAI (Reuters) – China’s central bank has neutralized the counter-cyclical factor in its daily yuan midpoint fixing, two sources with direct knowledge of the matter told Reuters.

The move comes as the Chinese currency has strengthened against the dollar over recent months amid accelerating foreign capital inflows and improving economic fundamentals. The has gained more than 6% against the dollar since late May.

The People’s Bank of China (PBOC) has asked some of the 14 midpoint contributing banks to submit and adjust their models to better reflect flexibility in the exchange rate and let the currency become more market-driven, according to one of the sources.

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