On Thursday morning, the People's Bank of China decided to set the exchange rate of the yuan against the US dollar at 7.1719 yuan per dollar, while expectations had indicated it would be set at 7.3000 yuan. The closing price for the pair in yesterday's session was 7.3050 yuan. The bank also injected 125.8 billion yuan into the markets through 7-day reverse repos at a yield of 1.5%.
It is worth mentioning that the People's Bank of China influences the value of the US dollar (USD) by tying the value of its currency - the yuan - to the US dollar. The bank uses a fixed exchange rate policy to manage the value of the yuan by keeping it stable against a basket of currencies of countries that are considered partners of China, with the basket measured against the US dollar (USD) since the United States is the largest trading partner of the People's Republic of China.
