China's central bank said on Monday that it has decided to lower the foreign exchange reserve requirement ratio by 200 basis points starting September 15.
The reserve requirement ratio will be reduced to 6 percent from the current 8 percent, the People's Bank of China (PBOC) said in a notice on its website.
The PBOC said the cut aimed to improve financial institutions' ability to use forex capital.
Both onshore and offshore yuan briefly bounced about 200 pips following the PBOC announcement and pared some of their earlier losses.
The PBOC last cut the forex reserve requirement ratio by 100 basis points in April.