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SHANGHAI, Dec 29 — China will change the way it calculates a key yuan index in the new year, nearly doubling the number of foreign currencies in a basket that is used to set the yuan’s value, the country’s FX market operator said today.
Starting Jan. 1, 2017, the number of currencies in the CFETS currency basket will be expanded to 24 from 13 currently, the China Foreign Exchange Trade System (CFETS) said in a statement on its website.
The move is aimed at improving the mechanism to generate and publish the CFETS RMB Index, and make the CFETS currency basket more representative, according to the statement.
China has been promoting the use of the CFETS RMB Index, partly to divert attention from the yuan’s value against the US dollar. The yuan has depreciated almost 7 per cent against the dollar this year, and is near the lowest level in 8-1/2 years.
The 11 currencies to be added, including the Korean won, the South African rand and the Mexican peso, will have a 21.09 per cent weighting in the CFETS currency basket, which CFETS said will basically cover the currencies of China’s major trading partners.
CFETS said it will adjust the composition and weighting of its currency basket on an annual basis. — Reuters