The fixing rate (i.e., central parity rate) of CNY against USD is determined as follows. The China Foreign Exchange Trade System (CFETS) first enquires prices from all market makers before the opening of the market on each trading day. Market makers should refer to the closing rate of the inter-bank foreign exchange market on the previous day, in conjunction with demand and supply condition in the foreign exchange market and exchange rate movement of the major currencies. CFETS excludes the highest and lowest offers, and then calculates the weighted average of the remaining prices in the sample as the fixing rate of CNY against USD for the day. The weights are determined by the CFETS in line with the transaction volumes of the respective market makers in the market as well as other indicators such as the performance of market-making.
In recent years, in order to further improve the market-based RMB exchange rate regime, the Foreign Exchange Self-Disciplinary Mechanism introduces a "counter-cyclical factor" in the quotation model for the fixing rate in a bid to appropriately offset the pro-cyclical volatilities driven by market sentiment, and therefore to better reflect economic fundamentals.
Under the authorization of the People’s Bank of China, the CFETS announces the fixing rates of CNY against more currencies on the interbank foreign exchange market daily through its website.
