Exclusive: China asks banks to suspend counter-cyclical factor in yuan fixing – sources

SHANGHAI (Reuters) – China’s central bank has neutralized the counter-cyclical factor in its daily yuan midpoint fixing, two sources with direct knowledge of the matter told Reuters.

The move comes as the Chinese currency has strengthened against the dollar over recent months amid accelerating foreign capital inflows and improving economic fundamentals. The onshore yuan has gained more than 6% against the dollar since late May.

The People’s Bank of China (PBOC) has asked some of the 14 midpoint contributing banks to submit and adjust their models to better reflect flexibility in the exchange rate and let the currency become more market-driven, according to one of the sources.