China Is Taking More Visible Steps to Slow Currency’s Decline

The People’s Bank of China set the yuan’s reference rate at 6.9096 per dollar on Tuesday, trailing behind the currency’s move to a two-year low. Photo: Bloomberg

(Bloomberg) — China set a stronger-than-expected exchange-rate fixing for a 10th straight day and said it will allow banks to hold less foreign currencies in reserve, its most substantial moves yet to stabilize a weakening yuan.

The People’s Bank of China (PBOC) set the yuan’s reference rate at 6.9096 per dollar on Tuesday, trailing behind the currency’s move to a two-year low. That came a day after the central bank said financial institutions will need to hold just 6% of their foreign exchange in reserve from Sept. 15, effectively increasing the supply of dollars and other currencies onshore. The decrease of 2 percentage points is the biggest in data going back to 2004.