The People’s Bank of China announced on 3 November that it will raise the foreign-exchange reserve requirement ratio (RRR) for financial institutions from 4 percent to 6 percent, effective 15 November 2026. The central bank stated that the adjustment is intended to strengthen the management of foreign-exchange liquidity in financial institutions.
The change reverses a September 2023 decision that had lowered the ratio from 6 percent to 4 percent. Market estimates suggest the increase will lock up approximately US$24 billion in additional reserves. The onshore yuan weakened following the announcement, after having strengthened to multi-year highs against the US dollar in recent sessions.
The measure tightens domestic dollar liquidity and signals official discomfort with the speed of recent yuan appreciation. For asset owners with China equity, fixed-income or currency exposure, it introduces a near-term policy variable that can affect both the exchange rate and the availability of foreign-currency funding in the banking system. Peer central-bank watchers and multi-asset managers will monitor whether the move proves sufficient to slow one-way appreciation expectations or whether further calibration follows.