Yuan weakens after reserve requirement rules scrapped Yuan weakens after reserve requirement rules scrapped
China’s yuan weakened against the U.S. dollar on Monday after the government scrapped measures meant to prop up the currency.
The central bank removed reserve requirements for financial institutions settling currency forwards, and for foreign banks holding yuan deposits offshore, reversing actions put in place a few years ago to quash depreciation pressures… China is balancing a number of priorities when it comes to its currency, including engineering stability in the markets ahead of a major leadership shuffle next month.
…
“Policymakers will want to introduce more uncertainty about the outlook to prevent the re-emergence of a view that the currency will only move one way,” wrote Williams.
Perception the yuan is a one-way bet complicates Beijing’s calls over the last few years that it’s loosening its grip on the currency as part of wider structural reforms to allow more of a role for open market forces.