The People’s Bank of China on Wednesday said it will allow banks to freely set yuan-dollar exchange rates for over-the-counter transactions, marking another step towards exchange rate liberalization, Reuters reported. Banks previously had to price the OTC rate within 3% of the central bank’s midpoint. “The liberalisation of the retail market implies that the PBOC believes the yuan has reached equilibrium,” said analyst Cao Yang. However, the wholesale market that banks trade in must still abide by the midpoint rate, which will continue to influence the retail market. The change takes place immediately.