PBOC signals efforts to cool the yuan’s rally
🏦 On November 3, the PBOC announced an increase in the reserve requirement ratio for foreign-currency deposits from 4% to 6%, effective November 15. Its stated aim is to strengthen foreign-exchange liquidity management.
💱 Following the announcement, the onshore yuan weakened as much as 0.37% against the dollar, pushing USD/CNY to 6.6728. The offshore yuan also declined.
🌏 The move follows a gain of more than 5% in the yuan this year, supported by exports, trade surpluses and corporate conversions of foreign currency into yuan.
💵 The adjustment is estimated to lock up an additional $24 billion in the banking system, reducing available dollar liquidity and helping curb appreciation pressure.
🔎 The decision suggests the PBOC wants to manage the pace of appreciation, though it does not establish a trend reversal. Upcoming daily midpoint settings will offer further clues about policymakers’ stance.
#ForexInsights $CXMT
🏦 On November 3, the PBOC announced an increase in the reserve requirement ratio for foreign-currency deposits from 4% to 6%, effective November 15. Its stated aim is to strengthen foreign-exchange liquidity management.
💱 Following the announcement, the onshore yuan weakened as much as 0.37% against the dollar, pushing USD/CNY to 6.6728. The offshore yuan also declined.
🌏 The move follows a gain of more than 5% in the yuan this year, supported by exports, trade surpluses and corporate conversions of foreign currency into yuan.
💵 The adjustment is estimated to lock up an additional $24 billion in the banking system, reducing available dollar liquidity and helping curb appreciation pressure.
🔎 The decision suggests the PBOC wants to manage the pace of appreciation, though it does not establish a trend reversal. Upcoming daily midpoint settings will offer further clues about policymakers’ stance.
#ForexInsights $CXMT
