In mid-March, the hard currency holdings of commercial banks finally stabilised after several weeks of decline, increasing by $163 million in one week to hit $1.6726 billion on March 17.
Commercial banks' Forex reserves had been falling for weeks after a decision by the NBS Bank Board to abolish the foreign exchange position limit for domestic banks and branches of foreign banks. In order to meet the required ratio between assets and Forex reserves, banks had been artificially inflating their total assets and liabilities. By canceling the measure, the NBS had been trying to return banks' Forex reserves to their natural levels.
