China has moved to prevent the yuan from falling. The People’s Bank of China (Central Bank) announced on the 25th that it will reduce the reserve requirement ratio of financial institutions by 1 point to 8%. The reduction will be implemented on May 15.
Following Shanghai, the outbreak of the new coronavirus is spreading in Beijing, and the offshore yuan temporarily hit a low against the dollar for the first time in a year and five months in a transaction on the 25th. After announcing a reduction in the reserve requirement ratio, the offshore yuan narrowed the rate of decline.
Offshore yuan has fallen by more than 1% for two consecutive business days-no sign of intervention
The People’s Bank said in a statement that “increasing the capacity of banks to utilize foreign currency funds” and helping liquidity management are aimed at reducing the reserve requirement ratio. By lowering the reserve requirement ratio, the supply of foreign currencies such as the dollar will increase in the mainland, and the depreciation of the yuan is expected to ease.
Original title:China Lowers Banks’ FX Reserve Ratio to Counter Yuan Weakness、PBOC Cuts Banks’ Forex Reserve Ratio by 1 Percentage Point (1)、Offshore Yuan Pares Declines After China Cuts FX RRR（抜粋）
(Update with more details)