China Steps Up Yuan Support as Currency Nears Weakest Since 2008
- PBOC reinstates risk reserves for derivatives to support yuan
- Onshore yuan weakened close to trading band limit of 2%
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China made it more expensive to bet against the yuan with derivatives, ramping up support for the currency as it slides toward the weakest level against the dollar since the 2008 global financial crisis.
The People’s Bank of China said Monday it’ll impose a risk reserve requirement of 20% on currency forward sales by banks. Since August, the central bank has sought to limit the yuan’s losses through its daily reference rate as well as demanding that lenders set aside more foreign exchange as reserves.