China Takes Its Most Visible Measure Yet to Curb Yuan’s Gain

The PBOC has increased the foreign exchange reserve requirement for financial institutions from 5% to 7% to curb the yuan's strength, which has reached a three-year high against the dollar. While some view this move as symbolic, the yuan's upward trajectory is supported by a substantial yield differential and a solid economic recovery. Analysts suggest further measures may follow to manage the yuan's value. Recent jawboning efforts by policymakers have aimed to weaken the yuan, and this reserve requirement increase is a concrete step in that direction.

What is the primary goal of the PBOC's decision to increase foreign exchange reserves?

• To increase the value of the yuan

• To boost foreign investments

• To reduce the amount of foreign currencies onshore

• To decrease the interest rates

How does Commerzbank view the PBOC's recent measure?

• As a significant policy shift

• As a largely symbolic action

• As a move to decrease the yuan's value

• As a strategy to increase foreign investments

What factors are contributing to the yuan's strength according to the transcript?

• Weakening global markets

• Decreasing foreign investments

• Substantial yield differentials and solid economic recovery

• High inflation rates

What does Standard Chartered suggest about the PBOC's recent action?

• It is the only measure needed to stabilize the yuan

• It will have no impact on the currency

• It might be followed by additional measures

• It will lead to a stronger yuan

What is the PBOC hoping to achieve with its concrete action?

• To decrease foreign exchange reserves further

• To increase the yuan's value significantly

• To prevent one-way bets on the yuan

• To encourage one-way bets on the yuan