USD/CNH up over 100 pips, breaks above 6.59

FXStreet (Bali) - USD/CNH has been rising quite sharply in early Asia, last at 6.5920 session highs, recouping some of the losses seen during Monday, following the announcement by the PBOC to impose reserve ratio on offshore yuan accounts.

The move by the PBOC reflects a growing concern towards excessive speculation towards a depreciation of the Yuan, which earlier int he year saw USD/CNH hit a record high of 6.75 before state-owned Chinese banks intervened buying offshore Yuan, causing an epic CNH short squeeze.

Bearing in mind the latest measures by the PBOC on reserve ratio, to be implemented on Jan 25th, it will effectively make borrowing the CNH currency a more expensive proposition, and as such, keep some of the perma CNH bears at bay.