China is boosting strong economy

The Chinese yuan’s exchange rate will stabilize after the People’s Banks of China will cut the reserve requirement ratio for foreign currency deposits, as the yuan touched a two-year low against the US dollar, according to analysts.

The PBOC’s move aims to raise the foreign exchange liquidity, regulate supply and demand in the forex market, and help stabilize the yuan exchange rate.

China’s central bank announced yesterday that it would lower the RRR to 6% from 8% on Sept. 15 to bolster the management of foreign currencies at financial institutions. This is the second RRR cut this year after the one to 8% from 9% on May 15, which was the first cut in 17 years. Market experts predicted that cutting the RRR by 2 percentage points will release around USD19.1 billion of foreign exchange liquidity.