China is starting to roll back measures meant to prop up its currency after a recent surge in the yuan erased all of last year's losses.
Starting today, the central bank has scrapped a reserve requirement rule on trades called currency forwards, making it cheaper for investors to buy dollars while selling the yuan. Banks previously had to set aside 20 percent of the previous month's yuan forwards settlement amount for use as foreign exchange risk reserves. The People's Bank of China is also removing a reserve requirement on yuan deposits for foreign banks.
These actions, along with tighter capital controls, were likely aimed at tempering yuan depreciation and to shore up confidence in the world's second-largest economy. Experts say the government's playbook worked: The yuan has strengthened 6.7 percent against the U.S. dollar this year, reversing last year's tumble entirely.
Rolling back these rules might be a "small measure … [but it's] a sign that there's a little more confidence, a little more flexibility," Hugh Young, managing director and global head of equities at Aberdeen Standard Investments, told CNBC's "Squawk Box" on Monday.