- PBOC: China to raise FX risk reserve ratio to 20% to rein in yuan weakness – Reuters
Market news
PBOC: China to raise FX risk reserve ratio to 20% to rein in yuan weakness – Reuters
China's central bank, the People’s Bank of China (PBOC), said on Monday it will reinstate foreign exchange risk reserves for some forwards contracts, a move that would make betting against the yuan currency more expensive in order to slow the pace of recent depreciation, reported Reuters.
Key quotes
The People's Bank of China (PBOC) said it would raise the foreign exchange risk reserves for financial institutions when purchasing FX through currency forwards to 20% from the current zero, starting on Sept. 28.
China's central bank scrapped the risk reserve requirements in October 2020, when the yuan rose sharply.
AUD/USD stays defensive
The news fails to impress AUD/USD buyers, despite strong ties between Australia and China, as the broad risk-off mood weighs on the Aussie pair.
Also read: AUD/USD Price analysis: Renews two-year low as bears poke four-month-old support around 0.6500
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