BEIJING/SHANGHAI: China's central bank moved to rein in the fast-rising yuan on Friday, scrapping risk reserves requirements for forex forward contracts in a move that would encourage dollar buying as exporters start to feel the pinch from a stronger currency.
The decision came after the yuan hit a near three-year high against the dollar on Thursday. It pulled back in Friday, pausing a sparkling rally largely driven by an unexpected boom in exports.
China's currency is up more than 7% on the dollar since last April. The PBOC's move, along with its weaker-than-expected setting of the currency's trading band on Friday, are the strongest pushback yet on the months-long rally.
"It means the PBOC is intervening as the yuan's appreciation is too fast," said Yuan Tao, an analyst at Orient Futures.
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