PBoC raises FX risk reserve ratio for forward trading

Chinese yuan notes

China’s central bank said today (September 26) that it will bring back a tool that will make shorting the yuan more expensive, as the Chinese currency weakens further against the US dollar.

The People’s Bank of China said it would impose a risk reserve requirement of 20% for banks when buying foreign currencies through forwards contracts, starting on September 28. The PBoC had previously scrapped the risk reserve requirement in October 2020, when the yuan rose sharply.

In a brief statement

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