The news that the People's Bank of China had moved to make shorting the yuan more expensive was out late Friday, posting this as an ICYMI:

  • People's Bank of China will impose a reserve requirement of 20 percent on some trading of foreign-exchange forward contracts, according to a statement on Friday evening
  • That will effectively make it more expensive to short the yuan, and is a tactic that the central bank used to stabilize the currency in the aftermath of its shock devaluation in 2015

That is via Bloomberg

Some responses:

  • ANZ: In effect, 20% of notional is locked up for a year with no interest, making it more expensive to short CNY.
  • OCBC: People have been testing the boundary; now it's finally reached
  • Commerzbank: If the move doesn't have an effect, China will use more intense measures to stem the yuan's depreciation
  • ING: PBOC's move is "the first explicit step" toward stemming yuan pressures