China's central bank cuts FX risk reserve ratio to zero

China's central bank announced on Friday that it will cut the foreign exchange (FX) risk reserve ratio for forwards trading to zero, in a move to bolster the development of the foreign exchange market.

The reserve requirement will be lowered from 20 percent to 0, effective from March 2, 2026, according to a statement from the People's Bank of China (PBOC).

The adjustment is aimed at supporting enterprises in their management of exchange rate risks, the PBOC said.

The bank added that it will continue to guide financial institutions to optimize currency risk hedging services for enterprises, in an effort to keep the Chinese yuan exchange rate generally stable at an adaptive and equilibrium level.

China's central bank cuts FX risk reserve ratio to zero

China's central bank cuts FX risk reserve ratio to zero

The central parity rate of the Chinese currency renminbi, or the yuan, stayed flat at 6.9228 against the U.S. dollar Friday, according to the China Foreign Exchange Trade System.

In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

Chinese yuan flats at 6.9228 against USD Friday