China cuts banks foreign reserve requirement ratio to support yuan

The PBOC previously raised the FX reserve ratio for financial institutions by 200 basis points in December 2021, to rein in a rising yuan and make it more expensive for banks to hold dollars

China's central bank said on Monday it would cut the amount of foreign exchange banks must hold as reserves, a move aimed at slowing the depreciation of the yuan, which is at its weakest levels in a year.

The People's Bank of China said it would cut the foreign exchange reserve requirement ratio (RRR) by 100 basis points (bps) to 8% beginning May 15, to "improve financial institutions' ability to use foreign exchange funds", according to an online statement.

The PBOC previously raised the FX reserve requirement ratio for financial institutions by 200 basis points in December 2021, to rein