Financial Institutions to Face New Reserve Rules on Currency Forwards

(Beijing) – The central bank is set to impose a temporary reserve requirement on financial institutions trading in currency forwards for clients, a move analysts say is aimed at stabilizing the yuan's exchange rate.

From October 15, all financial institutions that sell foreign exchange to clients in forward agreements must deposit one-fifth of their sales of with the People's Bank of China for one year at zero interest, according to a notice Caixin has seen.