Yuan Looks More Like Floating Currency Now, Fed Study Shows
- Daily fix now largely passes on previous day’s dollar moves
- Fix has less predictive power now than heavy-intervention era
Photographer: Jerome Favre/Bloomberg
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China’s currency is looking more like its overseas peers nowadays, although its fluctuations in daily trading sessions continue to be "unusually low," according to an analysis conducted by Federal Reserve Bank of New York staff.
The official morning "fix" for the yuan, which sets the mid-point for its permitted fluctuations that day, has become "quite responsive to market forces," John Clark at the New York Fed wrote in a paper posted on the bank’s website. It now largely passes through movements in the dollar-yuan exchange rate over the previous day, the study concluded from a statistical analysis.