China's central bank is preparing to raise the reserve requirement ratio for yuan deposits placed in yuan clearing banks from Jan. 25 in its latest bid to stem speculation in the currency, according to three sources who have seen the document outlining the change.
The People's Bank of China (PBOC), which had established the reserve requirement ratio (RRR) for offshore yuan participating banks in 2014, will return the rate to a normal level, the sources said, without specifying what that level would be.
It had been set at zero.
The change will also apply to correspondent banks.
Market participants suspect the planned reserve increase is intended to soak up additional liquidity in the offshore yuan, or CNH, market as the PBOC tries to stem speculation of further depreciation in the currency.