The reserve requirement ratio refers to the ratio between the deposit reserves that financial institutions deposit with the People’s Bank of China and the foreign exchange deposits they receive.
Foreign exchange reserve is one of the People’s Banks of China;
The People’s Bank of China shall be responsible for determining and adjusting the reserve requirement ratio for foreign exchange deposits, inspecting and supervising the implementation of the provisions on the management of reserve requirements for foreign exchange deposits by banking institutions.
The People’s Bank of China has decided to cut the reserve requirement ratio (RRR) for financial institutions by 1 percentage point, or 8 percent, from the current 9 percent, effective May 15, 2022.
The term “reserve for foreign exchange deposits” refers to the deposits that financial institutions deposit with the People’s Bank of China of a certain proportion of the foreign exchange deposits they receive.
Foreign exchange deposit reserve ratio refers to the ratio of the foreign exchange deposit reserve ratio that financial institutions deposit with the People’s Bank of China and the ratio of the foreign exchange deposit absorption.
The People’s Bank of China shall not pay interest on the reserve funds for foreign exchange deposits deposited by financial institutions.
1. Individual foreign exchange savings deposits, corporate foreign exchange deposits, petty fund deposits for issuing foreign currency credit cards and other foreign exchange deposits or liabilities approved by the People’s Bank of China accepted by financial institutions.
2. The credit balance of the principal and agent liabilities and assets of the financial institution after the reduction.
Where the balance of the debits is reduced, the balance of the DEBits shall be regarded as zero, and no debit balance shall be set off against the balance of other foreign exchange liabilities.
3. The People’s Bank of China shall, in accordance with the needs of regulation and control, stipulate and adjust the scope of foreign exchange deposits that financial institutions shall pay as reserves for foreign exchange deposits.
With Lagarde reiterating plans for two rate hikes this summer, it will be interesting to see if the dollar has peaked when Powell speaks this week.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
