China aims to maintain a stable yuan by measuring the currency against a basket of foreign currencies to create a flexible exchange rate system. The People’s Bank of China (PBOC) has recently released a trade-weighted index (TWI) for the yuan that measures the yuan’s valuation against a basket of the 13 currencies of China’s major trading partners. The TWI will be adjusted regularly. The U.S. dollar, euro and the yen are the three largest components in the basket, accounting for 26.4%, 21.4% and 14.7% respectively. The yuan has appreciated about 1.45% against the basket of currencies since the end of 2014 and weakened 5% against the U.S. dollar under the official reference rate. Yuan stability will now be measured in TWI terms.