China’s central bank goes even further to support the yuan

China’s central bank took another step to strengthen the yuan, making it more expensive for traders and institutions to bet against the currency after it quickly weakened against the dollar.

The People’s Bank of China said on Monday that financial institutions selling forward foreign exchange contracts will be subject to a risk reserve ratio of 20%, up from zero currently. The change, which will take effect on September 28, will make it more expensive for banks – and therefore their customers – to sell yuan to buy dollars in derivatives markets.