The yuan was flat against the dollar on Wednesday as the Chinese central bank kept its reference rate for the Chinese currency stable, although authorities apparently stepped up their efforts to drain excessive liquidity from the banking system. Official media and sources told Reuters the authorities had instructed some banks to restrict lending during the rest of January after a burst of credit in the first couple of weeks.

In a related development, the People's Bank of China (PBOC) ordered at least two banks, CITIC Bank and China Everbright Bank, to lift their required reserve ratios by 0.5 percentage point.

The restrictions came after the central bank already started to clamp down excessive liquidity in Chinese markets for the past two weeks by raising reserve requirement ratios for most banks and hiking short-term debt yields. Spot yuan was trading at 6.8275 against the dollar at midday, little changed from Tuesday's close of 6.8274 and in line with the central bank's mid-point.

Copyright Reuters, 2010