On Wednesday morning, the People's Bank of China decided to set the exchange rate of the yuan against the US dollar at 7.1710 yuan per dollar. Expectations had anticipated it to be set at 7.2971 yuan, while the closing price of the pair yesterday was 7.3060 yuan. The bank also injected 558 billion yuan into the markets through 7-day repurchase agreements, yielding 1.5%.
It is worth noting that the People's Bank of China influences the exchange rate of the US dollar (USD) by linking the value of its currency - the yuan - to the US dollar (USD). The bank employs a fixed exchange rate policy to manage the yuan's value by keeping it stable against a basket of currencies from countries that are considered partners of China. The basket is measured against the US dollar (USD) since the United States is China's largest trading partner.
