China Financial News: PBOC to expand yuan trading band to above 3%

Headline on the wires.

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The Financial News (a People’s Bank of China (PBOC) owned newspaper) outlines the orderly process for expanding the yuan’s trading band:

• The PBOC will initially reduce its intervention of setting the daily fixing
• It will then gradually expand the trading band to 3% from 1%

The paper cites Wen Bin, a senior researcher with Bank of China (China’s largest FX dealing bank), who also notes that the PBOC will adjust the composition of its currency basket by increasing the euro weighting and reducing the U.S. dollar weighting (in order to better reflect changes in foreign trade composition).