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China Sends Warning on Yuan Rally

People's Bank of China lifts rule that made betting against the currency expensive.

By Bloomberg News | Updated on September 11, 2017

China’s policy makers are pushing back against a surge in the yuan by lifting rules that made betting against the currency expensive.

Effective Monday, financial institutions will no longer need to set aside cash when buying foreign exchange for clients through currency forwards, the official Financial News reported, citing a People’s Bank of China notice. Previously, banks had to hold 20% of sales at zero interest for a year, a rule imposed in October 2015 as the authorities struggled to contain the fallout from the yuan’s devaluation. The central bank has also removed a reserve requirement on yuan deposited onshore by overseas financial institutions, the newspaper reported.

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