# Forex (Foreign Exchange) News: PBOC Lowers Risk Reserves Ratio for FX Forwards - Bloomberg

> The People's Bank of China lowered the foreign exchange risk reserve ratio for financial institutions on FX forwards from 20% to zero, effective Monday. Banks no longer need to set aside cash when buying foreign currency for clients through forwards. The change followed a sharp yuan rally that had pushed the currency toward 7 per dollar.

- Date: 2020-10-10 · published 2020-10-10T12:00:00.000Z
- Category: macro · region China · magnitude medium
- Page: https://feedsoft.ai/events/5556-forex-foreign-exchange-news-pboc-lowers-risk-reserves-ratio-for-fx-forwards
- Commodities: [Chinese Yuan (CNY per USD)](https://feedsoft.ai/c/USDCNY.md)

## Why it matters

Cheaper forward shorting of the yuan tends to weaken the currency and lift USD/CNY, which raises the dollar cost of Chinese purchases of US feed grains and meal. Its effect on commodity prices is indirect.

## Read by commodity

- USDCNY: bullish ▲

## Similar past events

| Commodity | Date | Event | 5-day % | 20-day % |
| --- | --- | --- | --- | --- |
| USDCNY | 2021-07-27 | [China Stock Rout Spreads Amid Fears of Foreign Investor Exodus - Bloomberg](https://feedsoft.ai/events/46290-china-stock-rout-spreads-amid-fears-of-foreign-investor-exodus-bloomberg.md) | -0.3% | -0.0% |
| USDCNY | 2020-10-11 | [Yuan off 17-month high after PBOC lowers forward reserve requirements \| The Sun Malaysia](https://feedsoft.ai/events/5559-yuan-off-17-month-high-after-pboc-lowers-forward-reserve-requirements-the-sun.md) | -0.2% | -1.0% |
| USDCNY | 2019-05-23 | [Trade tensions are starting to pull foreign-exchange markets into the arena \| INTERNATIONAL MARKET NEWS - Business Standard](https://feedsoft.ai/events/59285-trade-tensions-are-starting-to-pull-foreign-exchange-markets-into-the-arena.md) | -0.1% | -0.8% |
| USDCNY | 2017-01-16 | [Yuan Top Forecaster Sees No End to Losses as China Economy Slows - Bloomberg](https://feedsoft.ai/events/11878-yuan-top-forecaster-sees-no-end-to-losses-as-china-economy-slows-bloomberg.md) | -0.6% | -0.5% |
| USDCNY | 2021-06-17 | [China’s PBOC Braces for Weaker Yuan as Fed Plans Tapering - Bloomberg](https://feedsoft.ai/events/7116-china-s-pboc-braces-for-weaker-yuan-as-fed-plans-tapering-bloomberg.md) | +1.2% | +1.0% |

## Sources

- bloomberg.com: https://www.bloomberg.com/news/articles/2020-10-10/pboc-lowers-risk-reserves-ratio-for-fx-forwards-trading-to-zero

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Data from Feedsoft AI (https://feedsoft.ai/). For information only; not investment advice.