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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