There is a focus on the yuan in trade today as it noted that China's currency has surged 13% against the dollar since last May and the People's Bank of China is showing a sign that there are not comfortable with it.
Following yesterday's strongest fix of USD/CNY since May 17 2018, China has also forced banks to hold more foreign currencies in reserve for the first time in more than a decade, as Bloomberg reports as its most substantial move yet to rein the surging yuan.
The report explains that Chinese financial institutions will need to hold 2% more of their foreign exchange in reserve from June 15, taking it to 7%, according to a central bank statement Monday.
''The move, which the People’s Bank of China said will help liquidity management, effectively reduces the supply of dollars and other currencies onshore, putting pressure on the yuan to weaken,'' Bloomberg wrote.