August 6 2018

PBOC Grants Provisional Relief on Forex Risk Reserves for Some Cross-border Investment Businesses

The People's Bank of China recently announced that starting from August 6, 2018, the forex risk reserve ratio for forward forex sales is adjusted from 0 to 20%. On August 10, the central bank further explained the scope of businesses subject to forex risk reserves.

The central bank highlighted some forward forex sales that are exempt from forex risk reserves conducted by overseas institutional investors with investment in domestic securities market:

1) forward forex sales by overseas institutional investors used to hedge against forex risk exposure resulting from approved cross-border securities investment;

2) forward forex sales conducted with overseas central banks.