China to change yuan fixing calculation - Bloomberg

SHANGHAI (Reuters) - China plans to change the way it calculates the yuan's daily midpoint rate against the dollar, adding a "counter-cyclical adjustment factor" that may blunt the impact of market swings, Bloomberg reported on Friday. Under the new formula, institutions that provide quotes for the fixing will take into account the previous day’s official closing price at 4:30 p.m., the changes in baskets of currencies and the so-called counter-cyclical adjustment factor, it reported, citing unidentified people familiar with the matter. It did not give further details of the new formula, which was communicated to banks by the central bank this week. Banks were "tweaking and testing" their models and would start providing quotes using the new formula soon, it said. The new formula would partly filter out the impact of excessive volatility in the spot market by reducing the closing price’s role in the next day’s fixing, Bloomberg quoted its sources as saying. There was no immediate comment from the People's Bank of China (PBOC). The yuan lost around 6.5 percent of its value against the surging dollar last year but has been more stable so far in 2017 as the greenback lost steam. It rose 0.2 percent on Friday, taking gains so far this year to 1.4 percent. State banks stepped in on Thursday to support the currency in what some traders said was a show of strength a day after Moody's downgraded the country's credit rating. But analysts such as those at ANZ note the central bank had already been frequently setting stronger-than-expected midpoints since April, possibly to force spot rates to keep closer to the fixings. (Reporting by John Ruwitch; Editing by Kim Coghill)