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Yuan Appreciation Dampened after PBOC’s Forex Risk Reserve Cut: Daily

CHINA PRESS

The yuan's long-term appreciation may be dampened after the PBOC this week removed forex risk reserves for banks, a measure which encouraged yuan transactions, the Securities Daily reported on Tuesday citing Lian Ping, an economist from Zhixin Fund. Both onshore and offshore yuan rates dropped on the first day after the announcement. The PBOC may consider cutting countercyclical factors if the yuan continues to gain in the near term, thus avoiding one-way expectations and negative impacts on the export sector, Lian said. He said the FX risk reserve cuts should help businesses to counter currency risks using forward FOREX trading.

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