China reduces US dollar weighting in yuan fixing

BEIJING (BLOOMBERG) - China cut the weighting of the US dollar in its currency basket and added a further 11 currencies, a change that analysts told the Wall Street Journal said should help ease its depreciation pressure.

The dollar will fall to 22.4 per cent from 26.4 per cent in the trade-weighted basket from Jan 1, China Foreign Exchange Trade System said in an statement on Thursday (Dec 29). Additional currencies will include the South Korean won at 10.8 per cent and the South African rand, it said.

The CFETS RMB Index was unveiled in December 2015. People's Bank of China Deputy Governor Yi Gang said last month the yuan's depreciation versus the dollar was largely driven by the strength of the greenback and the market should refer to its performance against the basket as the economy maintains stable growth.

Thursday's increase will take the number of currencies in the basket to 24.