China’s central bank said on Friday it will cut the amount of foreign exchange that financial institutions must hold as reserves for first time this year, a move seen aimed at slowing the pace of recent yuan depreciation.
The People’s Bank of China said it would cut the foreign exchange reserve requirement ratio (RRR) by 200 basis points (bps) to 4 percent from 6 percent beginning Sept. 15, according to an online statement.
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.
The yuan has been plumbing nine-month lows as China’s post-pandemic recovery is quickly losing steam.
