China’s central bank will require financial institutions to set aside more of their foreign-currency deposits from Nov. 15, changing how much foreign currency they can deploy.
The People’s Bank of China (PBOC) said Tuesday it will raise the required share from 4% to 6%, a rise of two percentage points. The central bank said the adjustment is intended to strengthen foreign-exchange liquidity management.
Once the new rate takes effect, institutions will have to keep more of their foreign-currency deposit base at the PBOC, leaving a smaller portion available for other uses.
The onshore yuan’s recent advance included 14 consecutive sessions of gains beginning Oct. 14, Xinhua reported.
PBOC records show the ratio reached 9% after two increases in 2021. The bank lowered it three times during 2022 and 2023, bringing it to 4%. The new 6% level takes effect Nov. 15.
