China's yuan extends losses after PBOC changes reserves requirement

LONDON: China's yuan extended its fall on Monday, down as much as 0.95pc and set for its biggest daily drop since the peak of the COVID-19 market turbulence in March.

The yuan fell in both onshore and offshore trading after the People's Bank of China said on Saturday that it would lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading.

The offshore yuan was last down 0.9pc versus the US dollar, changing hands at 6.7510 at 0954 GMT.

"The move likely signals the PBOC's discomfort with the recent rapid appreciation of CNY," wrote Goldman Sachs analysts in a note to clients.

"The relaxation of reserve requirement itself would lower the cost for FX liabilities hedging and encourage FX derivative sales (which represents FX outflow)," they added.