China's yuan hits two-week low as PBOC raises FX reserve ratio to 6%
China's yuan fell to its weakest level in more than two weeks on Wednesday after the People's Bank of China raised the foreign exchange reserve requirement ratio by two percentage points, to 6% from 4%, in one of its strongest attempts yet to slow the currency's run higher.
The onshore yuan eased to 6.6832 per dollar in morning trade, the weakest since 19 October, before trading at 6.6794 by 0303 GMT. The offshore rate followed, slipping about 0.13% in Asian hours to 6.6782. The yuan has still strengthened roughly 5% this year.
"The PBOC is pulling the handbrake on a surging currency," said Eugenia Victorino, head of Asia strategy at SEB. "China's surging trade keeps the yuan firm. The central bank has been suppressing yuan appreciation for much of 2026 … If the trade-weighted index keeps stretching higher, Beijing has plenty of powder left to step in again."
Before the market opened, the PBOC set the midpoint at 6.7180 per dollar, its weakest fix since 23 October and 369 pips softer than a market estimate of 6.6811, according to Token Times. The spot rate may trade up to 2% either side of that fix each day. The central bank has been guiding the yuan gradually stronger this year, but at levels weaker than market expectations, which analysts read as an effort to manage the pace of appreciation.
On Wednesday's fix, the CFETS yuan basket index, which tracks the currency's trade-weighted value, fell to 103.75 from Tuesday's 52-month high, though it remains up about 5.9% this year, according to Token Times calculations from official data. Traders were also watching the US midterm election results for their effect on global currency markets, with investors positioning for a strong Democratic showing.
