China’s Central Bank Raises Foreign-Exchange Reserve Ratio to 6%

What changed

China’s central bank will raise the foreign-exchange deposit reserve ratio for financial institutions from 4% to 6% on November 15. The two-percentage-point increase follows a faster rise in the renminbi: it gained about 4.2% against the US dollar in the first nine months of 2026 and another 0.8% in October, breaking above 6.65 on November 2 after 14 straight trading days of gains.

Why it matters

Banks will have to hold more of their foreign-exchange deposits in reserve, tightening the supply of dollars and other foreign currencies available inside China. Industry estimates put the liquidity affected at roughly $20 billion to $25 billion.

That is a sizeable signal, but not a fixed exchange-rate target. The stated purpose is to steady market expectations and cool one-way bets on further renminbi appreciation while keeping the currency market orderly.

For companies, the practical message is restraint. A stronger renminbi can make foreign-currency assets look smaller in financial statements, creating what specialists describe as a paper loss. Managing that exposure with hedging tools or suitable foreign-currency investments is preferable to rushing into conversions or speculating on the exchange rate.

The eventual effect on the renminbi remains uncertain. If short-term trading turns into a self-reinforcing rush, the central bank says it may use further market-based measures to prevent a damaging overshoot.