USD/CNH faces near-term consolidation after the PBoC hiked the FX reserve ratio to 6%, signaling a policy intent to moderate the pace of Renminbi gains rather than reverse the trend.
On Tuesday the PBoC raised the FX deposit reserve requirement ratio by 2ppts to 6%, which tempered the yuan's appreciation momentum and drove a short squeeze that lifted USD/CNH to an intra-day high of 6.6860 before it eased. OCBC sees near-term consolidation or further pullback risk, supporting the pair, while its broader measured RMB appreciation bias caps the move. Daily fixings are the key swing factor.
China's central bank raised the FX deposit reserve requirement ratio to 6% (a 2 percentage-point hike), a measure intended to manage the pace of yuan gains rather than reverse the broader trend.
Resistance sits at 6.6760 (21-day moving average), 6.6840, and 6.6940/60, while support is at 6.6620 (23.6% Fibonacci level).
The People's Bank of China (PBoC) raised the FX deposit reserve requirement ratio by 2 percentage points to 6%, effectively cooling the rapid appreciation of the Renminbi. OCBC strategists note that while this move triggers short-term consolidation for USD/CNH, the broader trend of RMB appreciation remains intact. Markets are now closely monitoring daily fixings to gauge the central bank's tolerance for further currency strength.
China's central bank raised the FX deposit reserve requirement ratio to 6% (a 2 percentage-point hike), a measure intended to manage the pace of yuan gains rather than reverse the broader trend.
Resistance sits at 6.6760 (21-day moving average), 6.6840, and 6.6940/60, while support is at 6.6620 (23.6% Fibonacci level).