China to raise FX reserve requirement to slow yuan’s rally
The yuan has gained more than 5% against the dollar so far in 2026.
China has announced a 2 percentage point increase in the foreign exchange (FX) reserve requirement ratio (RRR), raising it to 6% from 4% as of November 15. This move aims to curb the rapid rise of the yuan, with the People's Bank of China (PBOC) estimating it will result in the withdrawal of an additional US$24 billion from the financial system.
The decision follows the yuan's record 0.37% weakening against the dollar, reaching its weakest level since October 23. The PBOC claims that this adjustment is aimed at better managing foreign exchange liquidity in financial institutions. Analysts believe the decision reflects market-driven yuan appreciation and intends to reduce momentum behind the appreciation, preventing excessive expectations in the market.
Despite the policy reversal from the PBOC's September 2023 move to lower the FX RRR, market participants do not expect the increase to reverse the yuan's upward trend.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- China to raise FX RRR to slow pace of yuan gains investing.com
