Yuan Set for Biggest Drop Since May After PBOC Raises FX Reserve Ratio to 6%; Swiss Franc Gains

China's yuan headed for its steepest one-day fall in six months on Tuesday, Nov. 3, 2026, after the People's Bank of China moved to slow the currency's long rally by raising the share of foreign currency deposits that banks must hold in reserve. Elsewhere in currency markets, the Swiss franc strengthened after Swiss inflation came in above forecasts, and the U.S. dollar was little changed overall as Americans voted in the midterm elections.

PBOC tightens dollar liquidity

The central bank said it will raise the foreign exchange reserve requirement ratio for financial institutions by 2 percentage points, to 6% from 4%, effective Nov. 15, according to Xinhua. The PBOC said the step is aimed at strengthening the management of foreign exchange liquidity at financial institutions.

The ratio sets how much of their foreign currency deposits banks must park with the central bank, so raising it reduces the supply of dollars available in the domestic market. Caixin reported that, based on nearly $1.2 trillion in foreign currency deposits at the end of June, the change could withdraw about $24 billion of liquidity, an estimate that matched a Reuters calculation. Caixin said it is the first increase in the ratio since late 2021. The PBOC raised the ratio twice in 2021 to 9%, then cut it three times in 2022 and 2023, to 4%, while the yuan was weakening.

Yuan reaction and fixing

The onshore yuan weakened as much as 0.37% to 6.6728 per dollar after the announcement, its weakest level since Oct. 23, Reuters reported, and was on track for its largest daily decline since May 15. The offshore yuan also fell. Caixin said the onshore currency had closed Monday at 6.6458 per dollar, its strongest level in more than four years.

The PBOC also set its daily midpoint at 6.7150 per dollar, weaker than the previous day for a second straight session. Reuters said the fixing was 661 pips weaker than its estimate, the largest weak-side gap since Sept. 10.

The yuan has risen more than 4.5% against the dollar this year, according to Caixin, supported by strong exports, large trade surpluses and heavy conversion of foreign earnings by companies, Reuters said. Analysts quoted by Reuters did not expect the measure to reverse that trend. Zhaopeng Xing, senior China strategist at ANZ, said the move would likely carry greater symbolic significance and would not be enough to ease the oversupply of dollars. Marco Sun, chief financial market analyst at MUFG (China), said the PBOC was trying to prevent the market from forming excessive one-way expectations. PBOC Deputy Governor Zou Lan said at a forum in Hong Kong that the market should play a decisive role in setting the exchange rate.

Swiss franc gains on inflation surprise

Switzerland's consumer price index rose 0.2% in October from September, compared with expectations for no change, lifting annual inflation to 1.5% from 1.0%, the Federal Statistical Office said, according to Investing.com. Economists had forecast 1.3%. Petroleum product prices were 40.3% higher than a year earlier, while core inflation held at 0.5%.

The dollar fell 0.3% to 0.8164 francs and the euro slipped 0.2% to 0.9137 francs, its lowest against the Swiss currency since June, CNBC reported, citing Reuters. FXStreet said the dollar touched a seven-week low of 0.8149 francs.

Dollar, euro and Australian dollar

The dollar index, which tracks the U.S. currency against six peers, was slightly weaker at 101.72 in Asian trading after hitting a one-month low on Monday. In European trading, the euro was up 0.14% at $1.1201, the pound gained 0.1% to $1.3421 and the yen was a fraction firmer at 157.8 per dollar, according to the CNBC report. Japanese markets were closed for a holiday.

The Australian dollar fell 0.5% to $0.6963 after the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85%, a move markets had expected. The 6-3 vote and the removal of language saying the bank was willing to raise rates further if necessary led traders to reduce bets on additional hikes, Westpac analysts said. The RBA's 4 p.m. Sydney reference rate put the Australian dollar at 0.6976 U.S. dollars on Nov. 3, down from 0.7023 a day earlier.

Central banks in Britain, Norway and Sweden are scheduled to announce policy decisions later this week.

Sources: Xinhua via gov.cn, Nov. 3, 2026; Reuters via Investing.com, Nov. 3, 2026; Caixin Global, Nov. 3, 2026; CNBC/Reuters, Nov. 3, 2026; Investing.com, Nov. 3, 2026; FXStreet, Nov. 3, 2026; Reserve Bank of Australia exchange rate data, Nov. 3, 2026.