The People’s Bank of China said it will raise the foreign exchange deposit reserve requirement ratio for financial institutions by 2 percentage points, to 6 percent from the current 4 percent, effective November 15, 2026. The central bank said the decision was taken to strengthen financial institutions’ foreign exchange liquidity management. The ratio sets the share of foreign currency deposits that banks must hold as reserves, so the increase withdraws foreign exchange liquidity from the banking system from mid November.
The decision follows a period of yuan strength. On Monday the PBOC set the USD/CNY central parity at 6.7146, against 6.7138 on Friday and a Reuters estimate of 6.6625, a fix about 521 pips weaker than market models projected, according to FXStreet. Moneta Markets reported the last verified onshore spot level at about 6.6523 on October 30, with the yuan on track for a fourth consecutive monthly gain, a pattern analysts read as the central bank being comfortable with yuan strength while slowing its pace.
Raising the foreign exchange deposit reserve ratio is one of the PBOC’s quantity tools for managing foreign currency liquidity without moving its policy interest rates. The bank gave no further detail in the one paragraph release, and the new 6 percent level takes effect with a twelve day lead time, on November 15.