The PBOC’s managed float permits the yuan to fluctuate 2% on both facet of every day repair, and the financial institution manages that band by way of lively shopping for and promoting of yuan. If USD/CNY threatens to rally past the two% restrict, as an illustration, the PBOC sells the greenback and buys yuan to shore up the latter’s worth. On the identical time, the financial institution buys the greenback towards different currencies to maintain the proportion of the dollar in reserves secure, guaranteeing the intervention will get recycled again into different international models.
