China may tighten its monetary policy next month in yet another move to keep the economy from overheating, the Wall Street Journal reported. Quoting an internal document issued by the People's Bank of China, the newspaper said the target next month is likely to be foreign currency deposits. The central bank may raise foreign-currency deposit reserve ratios for domestic and foreign commercial banks to 4%, up from 3%, by Sept. 15, according to the document seen by Dow Jones Newswires. The modest move would be the fifth tightening step this year and come after two increases in interests rates and two hikes in yuan reserve ratios. At 8.5%, the yuan reserve ratios are still more than double the ratio for foreign-currency reserve requirements.
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