China's central bank, the People's Bank of China (PBOC), has reduced the risk reserve requirement ratio for financial institutions involved in foreign-exchange forward trading to zero from 20%.
This move aims to curb the rapid appreciation of the yuan. Following this announcement, China's offshore yuan experienced a slight weakening of approximately 0.1%.
The reduction in the reserve requirement is intended to make it less costly for institutions to bet against the yuan, thereby discouraging further strengthening.
