China Minsheng Bank economist Wen Bin said the PBOC’s Nov. 3 hike in the
foreign-exchange deposit reserve ratio is a transparent, market-based step to
stabilize expectations and keep the RMB broadly stable. The move tightens
onshore USD liquidity and should ease near-term RMB appreciation pressure; the
tool can be eased if RMB depreciates too quickly. Historically, the PBOC raised
the FX deposit reserve ratio twice in 2021 to 9% and cut it three times in
2022–23 to the current 4%. Wen said the adjustment helps rebalance FX supply and
demand and disrupt self-fulfilling appreciation expectations.
