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Reuters quoted two sources with direct knowledge of the matter said on Thursday, as saying that the People’s Bank of China (PBOC) has restricted commercial banks from using some interbank accounts to deposit or lend Yuan offshore through free trade zone (FTZ) schemes.

Key Points:

“The move was announced in a notice by the Shanghai branch of the People’s Bank of China (PBOC) on Thursday morning, the sources said.

The restriction on offshore yuan deposits and lending applies to some Free Trade Accounting Unit (FTU) businesses though it is not expected to affect cross-border capital flows that reflect real demand, according to the notice.

The move was aimed at tightening offshore Yuan liquidity and making shorting the Chinese currency more expensive, traders said.”


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