Chart of the Day: China Revives Measure to Defend the Yuan

China’s central bank said it has revived its use of a “countercyclical factor” in calculating the yuan’s daily midpoint, with the aim of propping up the value of the currency and stabilizing market sentiment.

The countercyclical factor, first introduced in May 2017 to give the government more say over the currency’s daily parity rate, was basically removed this March after concerns about capital outflows eased.

However, as the yuan has lost 8% of its value against the U.S. dollar since mid-March due to a gloomy economic outlook and escalating trade frictions between China and the U.S., the central bank has quickened its steps to support the currency.

The yuan surged in late-night trading after authorities announced the supporting action on Friday. On Monday, the currency rose to its strongest level against the U. S. dollar in two and a half weeks.

Contact reporter Leng Cheng (chengleng@caixin.com)