website, banks in Hong Kong and other major hubs outside of the Chinese mainland will pay more if they sell dollars to clients using currency forwards. For the full year, Chinas FX reserves rose 129.5 billion from.011 trillion at the end of 2016. The yuan rose around.8 percent against the greenback in 2017, recovering from.5 percent loss in 2016 and reversing three straight years of depreciation. But reserves have since climbed by 142 billion. Despite Fridays rebound, the offshore yuan remains at its lowest level in roughly 14 months, only slightly better than in the morning when it was trading at a level on par with mid-May last year. (Reporting by Li Zheng, Zhang Jindong and John Ruwitch; Additional reporting by Sujata Rao-Coverly in London; Editing by Catherine Evans and Chizu Nomiyama). Stephen Innes, head of trading for Asia-Pacific at Oanda, said the pboc cut the reserve requirement ratio for the forward contract in September 2017, when the yuan was considered too strong.
Update 2-China nk to raise reserve requirements for forex China Foreign Exchange Reserves Data Chart
This time around the rule is back in place in a move seen as an effort to restrict dollar purchases when the yuan was weakening. That compares with an increase of 10 billion in November. Onshore yuan, which is traded by mainland traders, also dropped to its lowest level in 15 months.8724 yuan per dollar on Friday morning, down.5 per cent from Thursday. Economists polled by Reuters expect the yuan to depreciate slightly this year if the dollar firms. Capital flight had been seen as a major risk for China at the start of 2017, but a combination of tighter capital controls and a faltering dollar helped the yuan stage a strong turnaround, bolstering confidence in the economy. The Peoples Bank of China took action to defend against further currency devaluation on Friday, triggering a sharp rebound in the offshore yuan in evening trade after the currency eased to a 15-month low earlier in the day amid escalating trade tensions between Washington and. "It's a gesture to show that the yuan is not in free fall, that the pboc is still behind it said Gary Ng, an economist at Natixis in Hong Kong. The yuan has fallen to 14-month lows against the dollar in the onshore spot market as the trade dispute between the United States and China worsened. The onshore spot market finished domestic trading.8620 per dollar at 0830 GMT, having strengthened from a level.8965 at one point, its lowest since May 15, 2017.