China's central bank to raise forex deposit reserve ratio to 6% on November 15

Key facts

• The People's Bank of China said the ratio rises by 2 percentage points, to 6% from 4%.
• The central bank said the move aims to strengthen management of foreign exchange liquidity in financial institutions.
• The higher ratio takes effect on November 15, per the central bank's statement.

The People's Bank of China said it will raise the foreign exchange deposit reserve ratio for financial institutions to 6% from 4%, effective November 15. The central bank said the decision is aimed at strengthening the management of foreign exchange liquidity in financial institutions.

The reserve ratio is the share of foreign currency deposits that financial institutions must hold in reserve rather than lend or trade. Raising it reduces the foreign currency liquidity available to banks.