1 Sep 2023

China Uses Another Tool to Aid Yuan in String of Market Support – Bloomberg

China moved to support the yuan by increasing the supply of foreign currency in its local market, part of a multi-pronged effort by Beijing to restore confidence amid sluggish growth. Financial institutions will need to hold just 4% of their foreign-exchange deposits in reserve starting Sept. 15, the People’s Bank of China said Friday, compared to the current level of 6%. The greater availability of overseas currency relative to the yuan effectively boosts the allure of the latter. The so-called FX RRR cut came on the heels of Thursday’s reduction in down payments for mortgages to help the country’s under-pressure residential property market and after policymakers lowered stamp duty for stock trading over the weekend. The combination of supportive measures is a sign that Beijing is growing uncomfortable with increasing pessimism in its financial markets.

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