China's yuan hits 2-week low as investors weigh PBOC foreign exchange reserve hike

China’s yuan weakened to its lowest level in more than two weeks on Wednesday, with the onshore rate touching 6.6832 per dollar before trading at 6.6794. The offshore currency also slipped, last quoted at 6.6782, down about 0.13% in Asian trading. Business Recorder reported that the move followed a weaker-than-expected daily midpoint and investor reaction to a change announced by the People’s Bank of China (PBOC).

The PBOC raised the foreign exchange reserve requirement ratio by 2 percentage points, bringing it to 6% from 4%, in a bid to curb the yuan’s gains. The currency has risen about 5% this year, while the CFETS yuan basket index stood at 103.75, up about 5.9% year to date despite easing from Tuesday’s 52-month high. Investors were also watching the US midterm elections for potential implications for global currency markets.