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China Takes Steps to Rein in Thriving Yuan

Posted September 11, 2017

Under Economic Issues, International Trade Issues

(Lingling Wei – MarketWatch)

China is starting to unwind some of the extraordinary measures aimed at bolstering its currency, after the yuan’s recent surge in value began taking a toll on Chinese exporters, adding to economic headwinds.

Starting Monday, the People’s Bank of China will scrap a two-year-old rule that made it more expensive for traders to bet the yuan will fall in value, according to a central bank notice sent to commercial banks late Friday.

The move, which ends a deposit requirement on trades called currency forwards, will make it cheaper for companies and investors to buy dollars while selling the yuan, and thereby help rein in the Chinese currency’s steep ascent in recent weeks, traders and analysts said. The step will "fend off macro-financial risks," said the central bank notice, which was reviewed by The Wall Street Journal. Click here to read more.