China’s central bank said Monday that it would increase the risk reserve requirement ratio for financial institutions when conducting foreign-exchange forward trading, as the yuan faces increasing depreciation pressure.
The People’s Bank of China said the risk reserve requirement for forward foreign-exchange sales will be raised to 20% from currently zero. The move, which the central bank said is aimed at stabilizing expectations in the foreign-exchange market, will take effect Wednesday.
Monday’s move is expected to buoy the yuan, which has been facing renewed downward pressure, dragged by a surging U.S. dollar and a slowing Chinese economy.
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