China: PBOC hikes RRR for FX deposits by 2pp, signaling discomfort over recent rapid RMB appreciation

PBOC announced a 2pp hike to the reserve requirement ratio for FX deposits, from 4% to 6%, effective 15 November, signaling increased discomfort with the pace of RMB appreciation over the past two months. A higher RRR would drain FX liquidity onshore, easing CNY appreciation pressures, though the actual liquidity impact is small: onshore FX deposits stood at USD998bn as of September 2026, so the 2pp hike implies USD20bn withdrawal versus USD66bn average monthly FX inflows through goods trade over the past 12 months. The move signals the PBOC may slow near-term gains but still favors gradual appreciation rather than reversing the trend. We maintain our 12-month USDCNY forecast of 6.40, as the large trade surplus and solid exporter demand for FX conversion remain the main drivers.