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PBOC Cuts Forex Reserve Ratio to Counter Stronger Yuan: News


The PBOC's cut to the forex risk reserve ratio from Oct. 12 is to dampen excessive expectations of a surging yuan, according to a report in the central bank owned Financial News citing analyst Zhou Maohua at China Everbright Bank. As a countercyclical measure, the move removed banks' need to set aside funds for conducting long-term forex settlement business, therefore facilitating more transactions and helping keep the yuan stable, the newspaper said citing Ming Ming, a researcher with Citic Securities. The yuan gained 3.89% in the third quarter, the biggest rise since 2008. The currency is favored to gain further, driven by China's stable recovery and expectations of positive growth this year, the newspaper said citing analysts.

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