Central Bank Cuts Foreign Exchange Risk Reserve Ratio to Zero
China's central bank has announced a significant policy shift by reducing the foreign exchange risk reserve ratio for forward sales from 20% to 0%, effective March 2, 2026. This move is intended to enhance market stability as the country navigates ongoing economic challenges and seeks to promote confidence in the Renminbi.
This adjustment marks a notable development in China's financial landscape, reflecting the central bank's proactive approach to manage foreign exchange volatility. Industry experts believe this decision may provide greater flexibility for financial institutions and improve liquidity in the currency market, potentially influencing the broader banking sector and foreign exchange dynamics.
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