China's central bank announced on February 27, 2026, that it will eliminate the 20% foreign exchange risk reserve requirement ratio for forward foreign exchange sales, effective March 2. The move aims to reduce compliance costs for financial institutions and enhance liquidity in forex markets amid shifting global economic conditions.
The policy, initially introduced to stabilize currency fluctuations, is being phased out as part of broader efforts to streamline financial regulations. Analysts suggest this could signal confidence in the yuan's stability and encourage overseas investors to engage more actively with the Chinese mainland's markets.
This decision aligns with recent measures to bolster cross-border trade efficiency and follows a series of calibrated reforms to strengthen Asia's largest economy. Market observers anticipate increased hedging activity and improved risk management for businesses operating across the Asia-Pacific region.
