Yuan lower against currency basket
Print Edition
The yuan weakened more than 3 percent against a basket of currencies in July, according to a China Foreign Exchange Trade System index.
The CFETS RMB Index, which measures the yuan’s strength relative to a basket of currencies, came in at 92.41 at the end of July, a 3.4 percent decline from a month earlier, CFETS said yesterday.
The index compares the yuan to the value of 24 currencies, including the dollar, euro and Japanese yen.
The basket included only 13 currencies in 2016.
In July, an index that measures the yuan against the Bank for International Settlements currency basket went down 3.36 percent to 95.67, while against the Special Drawing Rights basket it weakened 3.33 percent to 92.7, according to CFETS.
China’s central bank announced Friday that it would raise the reserve requirement ratio from zero to 20 percent for financial institutions trading foreign exchange forward contracts from today.
As part of the macro-prudential policy framework, the move is a response to recent pro-cyclical fluctuations in the forex market and aims to forestall macro-financial risk, the People’s Bank of China said.
The central bank said it would “enhance monitoring and make counter-cyclical adjustments in accordance with the development of the situation to keep the forex market steady and the yuan’s exchange rate basically stable at a reasonable and balanced level.”
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