China Steps In to Support Yuan By Boosting Cost to Short
- Currency sank earlier on Friday to head toward 7 per dollar
- PBOC says it’s aiming to prevent macro financial risks
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China stepped in to try to cushion the yuan after a record string of weekly losses saw the currency closing in on the key milestone of 7 per dollar.
The People’s Bank of China will impose a reserve requirement of 20 percent on some trading of foreign-exchange forward contracts, according to a statement on Friday evening. That will effectively make it more expensive to short the yuan, and is a tactic that the central bank used to stabilize the currency in the aftermath of its shock devaluation in 2015.