China's central bank has made a change to the regime used tomanage the yuan, effectively removing a component used by banks tocalculate their submissions to the currency's daily reference rate,according to people familiar with the matter.

The People's Bank of China recently told some lenders thatcontribute to the rate—known as the fixing—to adjust their use ofthe “countercyclical factor” in such a way that it would have noimpact on the mechanism, said the people, who asked not to beidentified as the details are private. They said the change hasalready taken effect.

The yuan, which headed for its biggest drop in two months on thenews, is allowed to move a maximum of 2% either side of the fixing.Analysts said the change shows China is confident in the yuan'scurrent trajectory, which has been one of steady appreciation.

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