China's central bank to raise forex reserve requirement ratio to keep yuan stable
Published: November 4, 2026
Sources & Verification
Primary Source
People's Bank of China (PBOC) — Official document ↗
CPG Analysis
AI-assisted summary of the official source linked above, pending human review.
Verification
AI-assisted summary · generated Nov 4, 2026 · pending human review
This summary was generated by AI from the linked official source. It has not been reviewed line-by-line by a human editor.
⚡ Impact at a Glance
Who is affected
Banking and financial institutions, foreign exchange and treasury services, cross-border trade and exporters/importers
Cities / Agencies
Nationwide · People's Bank of China (PBOC)
What to do now
Banks should rebalance USD liquidity and foreign currency deposit positions before the November 15 deadline, and corporates with USD/CNY exposure should review hedging assumptions in light of a policy bias against further rapid yuan appreciation.
Source & verification
gov.cn · AI-assisted summary · generated Nov 4, 2026 · pending human review
Executive Summary
China's central bank will raise the foreign exchange reserve requirement ratio for financial institutions from 4% to 6%, effective November 15, 2026 — the first increase in nearly five years. The move forces banks to hold more foreign currency deposits at the PBOC, which drains U.S. dollar liquidity and is intended to slow the yuan's rapid appreciation. It signals that Beijing wants a stable, not strengthening, currency after a 4.2% rise against the dollar in the first nine months of the year.
Key Points
The People's Bank of China will lift the forex reserve requirement ratio by 2 percentage points, from 4% to 6%, taking effect November 15, 2026 — the first hike since 2021.
The ratio sets how much of a financial institution's foreign currency deposits must be parked at the PBOC; raising it withdraws U.S. dollar liquidity from the domestic market.
The yuan appreciated 4.2% against the U.S. dollar in the first nine months of 2026, with onshore gains accelerating to 14 consecutive trading days from October 14.
Economists estimate the hike will freeze roughly US$20–25 billion of forex liquidity at the bank level, easing dollar-selling pressure and correcting one-way appreciation expectations.
Markets reacted immediately: the offshore yuan weakened after the announcement, and the onshore spot rate closed at 6.6765 per dollar, down 307 pips on the day.
The PBOC framed the tool as open, transparent and market-based, reiterating that it has no preset exchange-rate target but will act against sharp short-term swings and herd behaviour.
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