PBOC announces foreign exchange reserve cut

The People's Bank of China, the country's central bank, announced on Friday that it would cut the foreign exchange reserve requirement ratio by 2 percentage points to 4 percent on Sept 15.

After the PBOC's announcement, the offshore exchange rate of the renminbi against the dollar strengthened, reaching 7.2391, the highest level in since August 11, but then retreated, according to Wind Info.

The PBOC said the move is aimed at enhancing the ability of financial institutions to utilize foreign exchanges. Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said the move will help boost onshore dollar liquidity and ease the depreciation pressure on the yuan.

The PBOC last cut the ratio in September last year.