China will adjust the weights in the yuan index basket in 2024 to better reflect trade patterns. We are talking about a decrease in the share of the dollar and the euro, writes Reuters.
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What is known
From January 1, the China Foreign Exchange Trading System (CFETS), controlled by the central bank, will reduce the weight of the US dollar in the currency basket to 19.46% and reduce the weight of the euro to 18.08%.
This step is intended to increase the representativeness of the yuan currency basket index.
China has already reduced the weight of the dollar and euro in the CFETS basket in 2023.
Such adjustments will not create sharp volatility in yuan trading, but will affect the establishment of the official daily average level of the yuan, which limits spot trading to a narrow 2% band around this level.
The CFETS Index ended the year at 97. 42, down 1.27% this year, while the mainland yuan lost 2.7% against the dollar.
In addition, CFETS will remove the Croatian kuna, adding the Bosnian mark, Moroccan dirham, North Macedonian dinar and Serbian dinar.