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Tuesday, 3 November 2026

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China’s Stronger Yuan Has Become a Policy Problem for Beijing

China will increase foreign-exchange reserve requirements from 4% to 6% after the yuan gained more than 5% this year. The decision highlights the competing economic effects of currency appreciation and Beijing's efforts to manage market expectations.

By Katherine (Kay)3 min read

Beijing, 3 November 2026 – China’s central bank is taking steps to slow the yuan’s appreciation, highlighting how a strengthening currency can create economic challenges even when it reflects investor confidence.

The People’s Bank of China announced on 3 November that it would increase the foreign-exchange deposit reserve requirement ratio for financial institutions from 4% to 6%, effective 15 November.

Reuters estimated that the adjustment could withdraw approximately US$24 billion in foreign-exchange liquidity.

The yuan has appreciated by more than 5% against the US dollar this year, supported by strong exports, trade surpluses and corporate foreign-exchange conversions. Following the announcement, the onshore yuan weakened by as much as 0.37%.

The decision reflects Beijing’s attempt to manage currency movements without necessarily reversing the yuan’s longer-term direction.

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Author

  • Katherine (Kay)

    Kay like to explores the intersection of money, power, and the curious humans behind them. With a flair for storytelling and a soft spot for market drama, she brings a fresh and sharp voice to Southeast Asia’s business scene.
    Her work blends analysis with narrative, turning headlines into human stories that cut through the noise. Whether unpacking boardroom maneuvers, policy shifts, or the personalities shaping regional markets, Kay offers readers a perspective that is both insightful and relatable — always with a touch of wit.