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China's central bank said it will cut the foreign exchange reserve requirement ratio for banks by 100 basis points to 8%, effective May 15. The move aims to slow the yuan's depreciation, which had reached a one-year low of 6.5775 per dollar amid COVID lockdowns and a narrowing yield advantage.
A weaker yuan raises the dollar cost of China's imports of feed grains and meal, which can cut demand. The easing is meant to support the yuan, which would reduce that pressure, though the effect on feed prices is indirect.
brecorder.comReutersApr 26, 2022After 50 past bearish policy events, Chinese Yuan (CNY per USD) moved a median -0.1% over 5 sessions (46% higher; middle half -0.4% to +0.4%), and -0.0% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
The PBOC FX reserve ratio cut shows depreciation pressure was strong and the yuan was at one-year lows, but it came earlier and was intended to slow the decline.
