China’s central bank is adjusting the mix of foreign currencies used in setting the yuan’s official daily value – a change analysts said should help support the weakening currency. The move, which goes into effect on Jan. 1, reflects the delicate dance Chinese policy makers face with the yuan. China wants a slightly weaker currency to help exporters and maintain competitiveness with other economies as the dollar rises. But it also worries that a sharp decline in the yuan’s value would raise fears the central bank is losing control, undermine the public’s trust and trigger excessive capital outflows, according to The Wall Street Journal. By diluting the dollar’s share and bringing in currencies from the Korean won to the Saudi riyal, the People’s Bank of China is giving itself more room to maneuver to keep the yuan from falling too fast, analysts said.
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