The USD/CNY does not float freely like other major currencies, allowing market forces to determine valuations. Instead, it’s heavily influenced by China’s central bank, the People’s Bank of China (PBOC), who establish its starting level each day.
This event, known as the ‘fix’ or central parity rate, occurs around 9.15am in Beijing. The level nominated by the PBOC is the midpoint of where USD/CNY will be allowed to trade during the session. The PBOC allows USD/CNY to trade in a range 2% either side of the fix, providing some scope for market forces to determine its valuation.
This is also commonly known as a fixed currency regime.