China’s Central Bank Steps in to Slow Its Rapidly Weakening Currency, As Yuan Hits One-Year Lows

• The Chinese yuan strengthened slightly against the U.S. dollar on Wednesday, reversing a sharp weakening trend after the People’s Bank of China (PBOC) signaled support for its currency. 
• The yuan has tumbled by about 3% this month as the U.S. dollar strengthened, according to Wind Information. Prolonged Covid controls and worries about Chinese economic growth have also weakened sentiment on the yuan. 
• On Monday, the PBOC announced it would cut the deposits by 1 percentage point to 8%, effective May 15. The move reduces the amount of foreign currency that banks need to hold, theoretically reducing the amount of weakening pressure on the yuan. 
• “Looking forward, we expect this reserve ratio cut to slow down CNY depreciation in the near term, though it would also depend on the broad USD path and overall sentiment toward Chinese growth,” Goldman Sachs analyst Maggie Wei and a team said in a report Monday. “Uncertainties are still high with Shanghai facing protracted lockdown and new local Covid cases rising in Beijing.”

(Source: CNBC News)