BEIJING/SHANGHAI, Jan 9 (Reuters) - China's central bank has effectively neutralized the so-called "counter-cyclical factor" it introduced last year to help manage the yuan's daily reference rate, sources familiar with the matter said on Tuesday.
The People's Bank of China (PBOC) made the announcement in a notice sent to a select number of banks that submit mid-point estimates each trading day which are factored into the central bank's calculus for setting the official rate, the sources said.
In response to a request for information about the matter, the PBOC said it was up to the contributing banks to determine the counter-cyclical factor coefficient independently.
When it introduced the counter-cyclical factor, the PBOC said that it was to better reflect supply and demand, lessen possible "herd effects" in the market and help guide the market to focus more on macroeconomic fundamentals. Traders said the mechanism helped to reduce price swings. (Reporting by Beijing newsroom; Writing by John Ruwitch and Winni Zhou in Shanghai; Editing by Jacqueline Wong)