The yuan ended flat against the dollar in key offshore non-deliverable forwards (NDFs) on Wednesday, responding very mildly to China's overnight hike in the ratio of bank reserve requirements, its strongest in a series of steps towards tightening monetary policy in more than a year.
The People's Bank of China (PBOC) said after the market closed on Tuesday that it would increase commercial lenders' reserve requirement ratios by 50 basis points as of January 18, making China one of the largest economies to start rolling back the emergency policies used to combat the crisis fallout.
The PBOC set the yuan's daily mid-point against the dollar at 6.8273 on Wednesday from Tuesday's 6.8274, also showing a consistent intention to keep the yuan stable for now. Spot yuan closed at 6.8268 against the dollar, little changed from the previous close of 6.8271 and in line with the central bank's mid-point.
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