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China May Revamp Yuan Fixing Formula

A change would smooth FX volatility and reduce the role of markets.

China is considering changes to the way it calculates the yuan’s daily reference rate against the dollar, a move that’s likely to reduce exchange-rate volatility while undermining efforts to increase the role of market forces in Asia’s largest economy.

Policy makers may add a “counter-cyclical factor” to the yuan’s daily fixing, according to a government statement Friday, which confirmed an earlier report by Bloomberg News. Analysts said the change would give authorities more control over the fixing and restrain the influence of market pricing.

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