China cuts forex reserve requirement ratio in bid to support tumbling yuan

Financial institutions will need to hold 6% of their foreign-currency deposits in reserves starting from Sept. 15, the PBOC said in a statement on Monday-- lower than the current level of 8%

China slashed the amount of foreign-exchange deposits banks need to set aside as reserves for the second time this year to boost the yuan after the currency hit a fresh two-year low.

Financial institutions will need to hold 6 per cent of their foreign-currency deposits in reserves starting from Sept. 15, the People’s Bank of China said in a statement on Monday-- lower than the current level of 8 per cent. The move is expected to increase the supply of foreign currencies, thereby making it more appealing for traders to buy the yuan.

The yuan slid as concerns over monetary-policy tightening