China’s central bank on Monday announced new measures to slow the pace of the yuan’s recent devaluation, making it more expensive to bet against the currency as policymakers around the world grapple with the economic effects of a wide-ranging crisis. dollar high.
The People’s Bank of China (PBoC) said it will increase foreign exchange risk reserves from zero to 20% from Sept. and strengthen macroprudential management.”
China adjusted its currency risk reserve index several times in recent years before ceasing to use this tool in October 2020, when the yuan rose sharply.
The latest move to reclaim currency risk reserves will effectively increase the cost of selling the yuan at a time when the local currency is facing fresh bearish pressure, traders and analysts said. They estimate that the cost of buying a dollar on credit can increase by 5 to 7 cents.
On Monday, the PBoC again set a firmer-than-expected official guidance on the yuan for the 23rd straight session at 7.0298 to the dollar.
The Chinese currency has been hit by a combination of broad dollar strength, a shaky local economy and a looser monetary bias adopted by the authorities to support growth.
The yuan has fallen more than 5% against the dollar since mid-August, passing the psychologically important 7 to the dollar, and is on track for its biggest annual loss since 1994, when China unified official and foreign exchange rates. Marketplace.
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.
