More Yuan Liberalization ?

China’s central bank intends to ease requirements for financial institutions to set aside foreign-exchange risk reserves for trading yuan forwards as of Sept. 11, Reuters said.

The move comes as the Chinese currency recently erased its entire decline from 2016. The on-shore yuan traded at 6.4773 to the dollar at the end of the trading session on Friday. The offshore yuan was slightly softer at 6.5013.

“Scrapping this requirement put in place in October 2015 to curb foreign exchange speculation suggests a more liberalized approach to yuan trading as the PBOC removes some of the defensive mechanism implemented to reduce capital outflow,” said Stephen Innes, Asia-Pacific head of trading at OANDA, in a note.



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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes