China is aiming to cool the yuan’s surge

Financial institutions will no longer need to set aside cash when purchasing foreign exchange for clients through currency forwards, effective today, according to a statement from the People’s Bank of China (PBOC)

SINGAPORE: China’s policy makers acted to restrain a rally in the yuan by removing rules that made betting against the currency expensive.

Financial institutions will no longer need to set aside cash when purchasing foreign exchange for clients through currency forwards, effective today, according to a statement from the People’s Bank of China (PBOC) on Saturday. Banks previously had to hold 20% of sales on some foreign exchange forward contracts, a move imposed two years ago when the currency slumped toward seven per dollar.