PBOC to Remove Reserve Requirement on FX Forward Trading
- Reserve requirement said to be cut to zero, from 20% currently
- Change seen aimed at slowing the yuan’s pace of appreciation
PBOC Said to Remove FX Forwards Rule
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China’s central bank will effectively remove a reserve requirement for trading foreign currency forwards -- a move that may slow the pace of yuan appreciation after its biggest two-week surge in at least a decade -- according to people familiar with the matter.
Effective Sept. 11, the People’s Bank of China will stop requiring financial institutions to set aside cash when buying dollars for clients through currency forwards, the people said, asking not to be identified because they aren’t authorized to speak on the matter in public. The ratio is currently set at 20 percent. The PBOC didn’t immediately reply to a fax seeking comment after usual working hours.