China Raises Its FX Reserve Requirement to 6%, Its First Hike Since 2021, to Slow a 4.2% Yuan Rally

Economic Warfare & Trade Policy › Trade & tariffs

The People's Bank of China building in 2020 (file photo). Photo: 維基小霸王, Wikimedia Commons, CC BY-SA 4.0.

The People’s Bank of China will raise the foreign exchange reserve requirement ratio for financial institutions to 6% from 4%, effective Nov. 15, to temper the yuan’s appreciation, Anadolu Agency reported. The ratio sets the share of foreign currency deposits that banks must hold at the central bank, and the 2-percentage-point increase is meant to tighten foreign currency liquidity, mainly in U.S. dollars, and ease upward pressure on the Chinese currency.

Key figures: 6% new fx reserve requirement, up from 4% · $938.1B china’s goods trade surplus, jan.-sept. 2026 · 40,000 t russian diesel aboard the tanker agioi fanendes

The yuan rose 4.2% against the dollar in the first nine months of 2026, and gains accelerated in October, when the currency climbed for 14 consecutive days in offshore trading starting Oct. 14. It is the central bank’s first increase in the ratio since 2021, when it was raised twice to 9% before being lowered three times in 2022 and 2023 to 4%.

Slowing, not stopping, the rally

Sadi Kaymaz, an Asian markets analyst, told Anadolu that the move pulls about $24 billion from the financial system but is unlikely to reverse the trend, according to a separate Anadolu report. “I don’t believe this decision will halt the yuan’s rise but it will only slow down the pace of its appreciation,” he said. “Chinese exports are strong and the country’s trade surplus is at very high levels, backing the yuan.” The dollar-yuan exchange rate has fallen about 4.5% this year, pushing the yuan to its strongest level against the dollar since 2022 by the end of October.

That surplus is the backdrop. China’s goods trade surplus reached a record $938.1 billion in January through September, up from $726.2 billion a year earlier, the South China Morning Post reported. Analysts told the Post the central bank’s move offers a reprieve to exporters, whose goods become more expensive abroad as the yuan strengthens. The full-year surplus is widely expected to top last year’s record of $1.2 trillion, and a Citic Securities research note described a feedback loop of rising appreciation expectations, concentrated currency conversion by exporters and faster yuan gains before the new policy.

Global markets also reacted to the U.S. midterm results, with the dollar posting its worst day since September and gold rising, as covered in our markets report on yields, the dollar and gold. Euro zone inflation reaching 4% is covered in our eurozone inflation story.

Wingtech rejects Nexperia plan

Shanghai-listed Wingtech Technology rejected a restructuring proposal under which it would lose control of Dutch chipmaker Nexperia’s assets outside China, calling the plan an “expropriation” driven by discrimination against Chinese investors, the South China Morning Post reported. Wingtech said court-appointed administrators had proposed a “two circles” structure. Nexperia has filed a new lawsuit against Wingtech and its founder, deepening a yearlong dispute with Dutch authorities.

New Jersey warns ports on Russian diesel

New Jersey Gov. Mikie Sherrill warned port and terminal operators not to accept Russian diesel shipments bound for the U.S. East Coast, arguing that the Trump administration’s authorization of the imports violates federal law, gCaptain reported. “Every port and terminal operator, intermediary, and buyer is on notice: do not help bring illegal Russian diesel into New Jersey,” Sherrill said in a letter sent Monday.

The dispute centers on General License 135, issued Oct. 9 by the Treasury Department’s Office of Foreign Assets Control, which authorizes the sale, delivery and importation of Russian-origin diesel through April 7, 2027. Sherrill argues it conflicts with the Ending Importation of Russian Oil Act passed in April 2022. The Malta-flagged tanker Agioi Fanendes, which loaded about 40,000 metric tons of diesel at Russia’s Baltic port of Primorsk on Oct. 22, initially listed New York as its destination but changed its AIS destination to “for orders.” Maritime intelligence firm Windward said Nov. 3 that it appears to be the only one of three Russian diesel tankers previously reported heading to the United States still on course for the East Coast; Talisman and Leruo changed their declared destinations, and no Russian diesel has yet been delivered under the license. Sen. Richard Blumenthal, D-Conn., had called on the tanker’s owner to turn around. Background on Russia’s diesel export policy is in our Nov. 1 report on Russia’s diesel export ban.

Gas and steel pipe

QatarEnergy signed a 20-year agreement to buy 3 million metric tons a year of liquefied natural gas from Woodside Energy’s Louisiana facilities, a week after deals with Cheniere Energy for up to 4 million tons a year through 2054, a Reuters column published by gCaptain said. Deliveries begin in 2030 and 2031 and will make Qatar the largest buyer of U.S. LNG. Separately, the Commerce Department issued a preliminary affirmative determination that certain oil country tubular goods, steel pipe used in drilling, from Taiwan were sold in the United States at less than fair value, according to the Federal Register.

By the numbers

China’s surplus for the first nine months of the year is about 29% larger than a year earlier, by TBR calculations from South China Morning Post figures.

Watch for the yuan’s moves after the Nov. 15 effective date, October trade data and whether any terminal accepts the Agioi Fanendes cargo.

Sources

• Anadolu Agency: China raises foreign exchange reserve requirement ratio to curb yuan rally
• Anadolu Agency: China’s reserve requirement hike to slow but not halt yuan’s rapid rise
• South China Morning Post: Chinese exporters see respite as Beijing curbs yuan rise amid record surplus
• South China Morning Post: China’s Wingtech rejects proposal on Nexperia, cites ‘discrimination’
• gCaptain: New Jersey Governor Warns Ports Against Handling Russian Diesel
• gCaptain: Qatar's US LNG Bet Signals a New Energy Order
• Federal Register: Certain Oil Country Tubular Goods From Taiwan: Preliminary Affirmative Determination of Sales at Less Than Fair Value

Additional sources

• Anadolu: Gold, silver prices surge as US dollar drops after midterm elections
• Anadolu: Global markets trade lower as early US midterm results signal Democratic sweep