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Raising reserve requirements for forex settlements to fend off financial risks

Reuters

HONG KONG, Aug 3 (Reuters) - China's central bank said on Friday it was raising a reserve requirement for financial institutions settling foreign forward yuan positions in order to fend off financial risks.

The central bank said banks would be required to keep reserves equivalent to 20 percent of their clients' foreign exchange forwards positions from Monday, it said.

The move is a transparent, non-discriminatory, price-based counter-cyclical macro-prudential policy tool, not capital control, he People's Bank of China said in the statement. (Reporting by Meg Shen and Twinnie Siu Editing by Alison Williams)