People's Bank of China said it will cut the amount of foreign exchange reserves that financial institutions must hold, a move seen as aimed at slowing the yuan's recent depreciation.
- PBoC to lower its FX Reserve Requirement Ratio by 200 basis points (bps) to 4% from September 15th
This will free up some dollar liquidity and support the yuan. The PBOC previously cut the FX reserve requirement ratio for financial institutions by 200 basis points in September 2022 in a bid to rein in a weakening yuan and make it less expensive for banks to hold dollars.
This is one of the tools Nomura nominated the PBOC could use:
Offshore yuan marked higher:
