Aug 12, 2015 06:31 PM

Why Beijing Reformed Its Exchange Rate System Now

The central bank's recent announcement on changing the way the reference exchange rate for the yuan is calculated linked the rate to the closing price of the currency in the previous trading session. This is the most important reform to the exchange rate system since the last change was made in 2005. The announcement triggered an immediate depreciation in the value of the yuan against the U.S. dollar.

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