CHINA has adjusted the weightings of a key yuan index basket this year, according to the country’s foreign exchange trading platform, in a move traders and analysts said would help ensure the yuan’s value does not act as a brake on China’s exports.

Starting Jan. 1, the China Foreign Exchange Trade System (CFETS) has increased the U.S. dollar’s weighting in the CFETS currency basket to 19.88 percent from 18.79 percent and has raised the euro’s weighting to 18.45 percent from 18.15.

Raising the dollar and euro’s weightings is unlikely to create much volatility in yuan trade, although it may affect the setting of the yuan’s official daily midpoint fixing, from which the spot price is allowed to move 2 percent higher or lower.

The CFETS index finished last year at 102.47, up 8.05 percent, while the Chinese currency strengthened about 2.8 percent against the dollar in 2021, becoming the best-performing emerging market currency.

China has adjusted the CFETS basket multiple times since it introduced the trade-weighted yuan exchange-rate index in December 2015 to better reflect external trade conditions.

(SD-Agencies)