The PBOC’s managed float allows the yuan to fluctuate 2% on either side of daily fix, and the bank manages that band via active buying and selling of yuan. If USD/CNY threatens to rally beyond the 2% limit, for instance, the PBOC sells the dollar and buys yuan to shore up the latter’s value. At the same time, the bank buys the dollar against other currencies to keep the proportion of the greenback in reserves stable, ensuring the intervention gets recycled back into other foreign units.
>