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Yuan Drops Amid Bets PBOC Reducing Intervention as Costs Climb

  • Authority asks institutions to step up currency checks
  • Recent levels of support unsustainable, says analyst
Updated on

China’s yuan posted the biggest three-day drop since August amid speculation that the central bank has reined in intervention to gauge whether recently imposed market curbs have succeeded in reducing bets against the currency.

The State Administration of Foreign Exchange has asked financial institutions in Shanghai and Guangdong to step up checks in their currency businesses, people familiar with the matter said on Tuesday. This came as the central bank confirmed it is imposing a 20 percent reserve requirement on institutions’ currency forward sales. The deposits, effective Oct. 15, will be held at zero interest for a year, said other people familiar with the matter.