PBOC to lower FX risk reserve ratio to zero, effective from Monday

Dhwani Mehta FXStreet

The People’s Bank of China (PBOC) will slash its reserve requirement ratio (RRR) to zero for some forex exchange forwards trading, effective from Monday, the central bank said on its website this Saturday.

The PBOC said: “The People’s Bank of China (PBOC) will continue to maintain flexibility in the exchange rate, stabilize market expectations, and keep the yuan basically stable at reasonable and balanced levels.”

“The move came after the onshore spot yuan rate ended at a 17-month high on Friday against the dollar, its biggest one-day percentage gain since 2005,” per Reuters.

Market implications

The PBOC’s supportive measures could bode well for the Chinese proxy, the AUD, in the weekly opening trades.

Despite the RBA’s dovishness, AUD/USD settled the week at two-week highs of 0.7244, having gained 1.03% on Friday. The Kiwi, however, was the top performer across the fx space last Friday.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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