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 the FX reserve requirement ratio for banks on Monday to help support the yuan as it continues to depreciate against the U.S dollar and threatens to break through the CNY7 per U.S. dollar level. The central bank cut the forex RRR for the second time this year, lowering it from 8% to 6% and making it effective from September 15th. The PBOC said it would “improve financial institutions' capacity to use foreign funds”.
Analysts estimate the cut will unlock USD19 billion in U.S. dollar liquidity. The yuan rallied in both onshore and offshore markets against the greenback. The offshore yuan dipped modestly, falling to 6.9330 in the wake of the announcement, having traded to an intraday higher 6.9430.
MNI, citing analysts, reported last week that the PBOC would take action should the yuan experience any sharp one-way drop (See MNI: Signs of PBOC Counter-Cyclical Factor In CNY Fix - Analysts).
Yuan vs US dollar over last 12 months
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.