China to cut RRR for foreign currency deposits by one percentage point

The People's Bank of China announced on Monday that it will cut the reserve requirement ratio for foreign currency deposits by one percentage point from the current 9 percent to 8 percent starting from May 15 in a bid to improve the management of foreign currencies in financial institutions.

Experts say that the move aims to stabilize the foreign exchange rate, as there are signs of a rapid devaluation of the renminbi (RMB).

The potential depreciation pressure on the yuan increases in the second and third quarters, said Huang Wentao, an analyst with China Securities.

However, policy measures of China's Central Bank are relatively sufficient, and the market reaction to the depreciation pressure is rational, said Zhou Guannan, an analyst with Huachuang Securities. 

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