Foreign exchange reserve requirement ratio will be lowered by 200 basis points, says central bank
The People’s Bank of China on Friday decided to cut the reserve requirement ratio to provide more liquidity in domestic markets.
The foreign exchange reserve requirement ratio will be lowered by 200 basis points to 4% from 6% starting from Sept. 15, according to a bank statement.
This is the first such cut of the central bank this year, as it seeks to support the weakening yuan and help economic recovery.
Chinese yuan is one of the worst-performing Asian currencies in 2023, down around 5%, as the country struggles to ramp up its economy after the lifting of COVID-19 restrictions at the end of last year.
The yuan rose to 7.2460 per dollar after the move, the strongest level in three weeks.