Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
The People's Bank of China cut reserve ratio requirements for financial institutions on foreign exchange deposits from 9% to 8% on Monday, effectively giving firms an increased capacity to use their balance sheet to convert currency holdings into yuan.
The move by the central bank, effective from May 15, was announced the same day a previously-announced 25-basis-point cut in banks' overall reserve requirements came into effect. It should reduce the need for commercial banks to hold foreign currency, potentially easing demand for U.S. dollars and helping to steady the yuan, which hit an intraday high of 6.6092 earlier on Monday in offshore trade. It recovered to 6.5717 following the PBOC's announcement.
The PBOC last tweaked the forex RRR in December 2021, when it increased the ratio by two percentage points to 9% from 7%, as the pair traded close to multi-year lows around 6.35.
Offshore dollar-yuan rate over last 30 days
Source: Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.