Sep 26, 2022 03:28 PM

FINANCE

China Reinstates Risk Reserves for Derivatives to Support Yuan

The daily reference rate for the yuan was set at a level weaker than 7 per dollar for the first time in two years on Monday. Photo: Bloomberg

The daily reference rate for the yuan was set at a level weaker than 7 per dollar for the first time in two years on Monday. Photo: Bloomberg

(Bloomberg) — China brought back a tool to make it more expensive to bet against the yuan via onshore derivatives, after the currency edged close to the weak end of its trading band.

The People’s Bank of China will impose a risk reserve requirement of 20% on banks’ foreign-exchange forward sales to clients, it said in a statement on Monday. The reserve ratio has been zero since 2020.

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