中国：央行将外汇远期售汇准备金率降至零，释放放缓人民币升值信号-China_ PBOC cuts FX forward sales reserve requirement ratio to zero, signaling intent to slow CNY appreciation

Summary of Key Points from the Conference Call Industry Overview - The document discusses the recent changes in the foreign exchange (FX) policy of the People's Bank of China (PBOC), particularly focusing on the reserve requirement ratio (RRR) for FX forward sales, which has been cut from 20% to 0% effective March 2, signaling a shift in the PBOC's approach to managing the Chinese Yuan (CNY) appreciation [1][8]. Core Insights and Arguments 1. RRR on FX Forward Sales: - The RRR was introduced in September 2015 as a macro-prudential tool to manage FX depreciation pressures. It has been adjusted counter-cyclically, being relaxed during appreciation phases and reimposed during depreciation periods [2][8]. - The cut to 0% reduces the cost of FX hedging for importers, indicating a normalization of FX policy settings after previous tightening measures in 2022 [1][8]. 2. Recent CNY Appreciation: - The CNY has appreciated rapidly, with USD/CNH spot falling below 6.85 shortly after the Lunar New Year, marking a 1% appreciation. This trend has been supported by stable USD conditions and signals from the PBOC regarding greater tolerance for currency strength [8][9]. - The pace of appreciation is viewed as excessive, with a 1% increase occurring within a week, which is significantly faster than historical trends [9][10]. 3. PBOC's Response: - The PBOC has expressed discomfort with the rapid appreciation through weaker daily CNY fixings, indicating a desire to slow the pace of appreciation. The recent fixing marked the largest positive counter-cyclical factor on record, suggesting intervention intentions [10][17]. - The PBOC may utilize various policy tools to stabilize the USD/CNY spot rate, including raising the RRR on FX deposits to manage liquidity and interest rate differentials [17][19]. 4. Medium-Term Outlook: - Despite the recent measures, the medium-term outlook remains constructive for CNY appreciation against the USD, supported by factors such as FX undervaluation, solid export performance, and manageable macroeconomic costs associated with a stronger CNY [1][17]. Additional Important Content - The document includes a timeline of China's FX management since 2019, highlighting key measures taken by the PBOC to influence the CNY's value [6][7]. - It emphasizes that the impact of the PBOC's measures tends to be short-lived, primarily aimed at slowing the pace of currency movements rather than altering the underlying trend [10][17]. - The report advises investors to consider this information as one of many factors in their investment decisions, underscoring the importance of a comprehensive analysis [4][8]. This summary encapsulates the critical points regarding the PBOC's recent policy changes and their implications for the CNY and broader economic context.