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China discarded the renminbi's decade-old direct peg to the US dollar in July last year, switching to a mechanism that sets the exchange rate on a basket of world currencies. Under the new regime, the yuan is allowed to fluctuate 0.3 percent per day either way of the reference rate, which is set by the central bank. The renminbi appreciated to 7.9982 yuan against the US dollar on May 15, the first time in 12 years that the currency fell below 8 yuan. On December 14, the renminbi strengthened to below 7.8197 against the US dollar, and the appreciation has gained pace.
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