The People's Bank of China (PBOC) is poised to determine the daily USD/CNY reference rate, anticipated to be 7.1679 as estimated by Reuters. Typically announced around 0115 GMT, this decision by the PBOC significantly impacts the value of the yuan, also known as the renminbi (RMB). As China's central bank, the PBOC operates under a managed floating exchange rate system, allowing the yuan's value to fluctuate within specific parameters.

Central to this system is the daily midpoint the PBOC establishes for the yuan, predominantly against the US dollar, with considerations for other global currencies in a specified basket. The calculation of this midpoint reflects several factors, including market dynamics, economic indicators, and variations in international currency markets. Once set, this midpoint guides trading for the day.

The yuan's trading band permits a movement range within +/- 2% of the established midpoint, meaning the currency value can rise or fall by up to 2% in one day’s trading. This range offers flexibility for the yuan to adjust in response to market conditions, policy goals, and economic shifts. However, when the yuan approaches the boundary of this trading band or reflects extreme volatility, the PBOC may intervene. Such interventions, by purchasing or selling the yuan, aim to stabilize its value and maintain orderly market conditions. This proactive engagement by the PBOC ensures that changes in the yuan's value occur at a moderated and predictable pace, safeguarding economic stability.