1/3 #PBOC reduces reserve requirement for forwards to 0%. Last time it was reduced to 0% was in Sept 17, which saw #CNY weaken for the next month and a half, partly reversing the prior strength. Market will likely unwind long #yuan positions on Monday as they interpret this...

2/3 … as a signal that the authorities want to reign in currency strength. But this removal of the reserve requirement could be more to encourage firms to hedge FX risk and part of enhancing market structure. The fixing on Monday will be closely watched for any further clues.

3/3 CFETS Index above 96 is probably when the authorities will start to become more concerned about #yuan strength. But they will be ok with Monday's knee-jerk reaction as they want to see two-way flows.