Economics
Offshore Yuan Declines After China Lifts Banks’ FX Reserve Ratio
- Increase in FX reserve ratio to 9% goes into effect Dec. 15
- This is the second time PBOC has raised the ratio this year
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The offshore yuan dropped to its lowest level this month after China forced banks to hold more foreign currencies in reserve for the second time this year, its most substantial move yet to rein in the surging yuan.
Financial institutions will need to hold 9% of their foreign exchange in reserve starting Dec. 15, the central bank said in a statement Thursday evening Beijing time, a 2 percentage-point increase. Earlier in the day, the People’s Bank of China had signaled a limit to its tolerance for the recent advances by setting its reference rate at a weaker-than-expected level.