The People's Bank of China plans to add a "counter-cyclical adjustment factor" that'll blunt the impact of big market swings

So reports Bloomberg, citing people familiar with the matter

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. local time,
  • the changes in baskets of currencies,
  • and the new counter-cyclical adjustment factor,

The PBOC communicated the new formula to banks this week, with the banks now "tweaking and testing their models and will start to provide quotes using the new formula soon" the people said

More:

  • 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