BizBeat Ep.153: China's central bank raises foreign exchange reserve ratio – what does it mean?
China's central bank is raising the foreign exchange reserve requirement for banks to 7% from 5%, effective Tuesday. It is the first such hike in 14 years since the previous change in May 2007 — before the financial crisis. It is estimated the move will reduce the amount of foreign currency available for long-term trading by $20 billion, helping stabilize the exchange rate of the Chinese yuan. China's economy has returned to operate at full capacity rather quickly after containing the pandemic, making the country a “safe haven” within the emerging markets and a destination for capital flows from foreign investors. In this episode of BizBeat, CGTN's Michelle Van den Bergh explains the impact of the central bank's increase in the reserve requirement ratio.