The People’s Bank of China will raise the reserve requirement ratio for clearing banks participating in the offshore yuan market from zero on January 25, the level at which it set the ratio in 2014, Reuters reported, citing unnamed sources. Forcing banks offshore to hold more yuan in reserve would reduce the amount of the currency available in the market, further squeezing supply to make it more difficult for speculators to bet against the currency’s valuation. One international investment banker said that as a large volume of offshore yuan is actually being deposited back into China, the costs of borrowing the yuan “are set to rise.”
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