Business · Markets · 57 mins ago
China raises foreign-currency reserve requirement to curb yuan gains
China’s central bank raised the foreign-currency reserve requirement for banks on November 15.
The requirement went from 4% to 6%, meaning banks must hold more of their foreign-currency deposits with the central bank.
The move is intended to reduce the foreign currency circulating in markets and limit pressure for the yuan to rise.
A stronger yuan can make Chinese exports less competitive, and the central bank says the change is meant to ease that headwind as weak domestic demand weighs on the economy.
It is the first increase since December 2021, about five years ago.
Based on foreign-currency deposits of about $1.2 trillion at the end of September, around $24 billion more will be held by the central bank; no further steps are specified.
China’s central bank raised the foreign-currency deposit reserve requirement for commercial banks from 4% to 6%.
The move is intended to reduce foreign currency circulating in the market and curb gains in the yuan.
The People’s Bank of China said the step would ease pressure on exports as weak domestic demand weighs on the economy.
The increase is the first since December 2021.
Based on foreign-currency deposits at the end of September, about $24 billion more will be deposited with the central bank.
- Who
- The People’s Bank of China, the country’s central bank.
- What
- It raised the foreign-currency deposit reserve requirement for commercial banks from 4% to 6%.
- When
- November 15, 2026.
- Where
- China.
- Why
- To reduce foreign currency in circulation, curb yuan gains and ease pressure on exports amid weak domestic demand.
This story does not have two clearly opposing sides.
The previous increase in the foreign-currency deposit reserve requirement took place.
Foreign-currency deposits stood at about $1.2 trillion.
The central bank raised the requirement from 4% to 6%.
- New reserve requirement
- 6%
- Previous reserve requirement
- 4%
- Foreign-currency deposits at end of September
- About $1.2 trillion
- Additional deposits with central bank
- About $24 billion
- Previous increase
- December 2021