PBOC has lowered the reserve requirements on some forward yuan FX trading. Intervention on yuan strength?

Author: Eamonn Sheridan | Category: Central Banks

The People's Bank of China has cut the requirement to zero for some forward FX.

When a financial institution sells USD against yuan to clients some of these deals will be cut to a 0% reserve requirement, from 20% previously
  • Takes effect Monday
CNY hit a 17 month high on Friday. This policy move from the PBOC will, at the margin, impact to weaken the yuan (a small impact only). Thee is some concern the currency will continue to strengthen into the US election so the Bank move can be read as a (small) expression of concern at the level of the yuan. 

The People's Bank of China has cut the requirement to zero for some forward FX.


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