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(Bloomberg) -- The yuan ended its longest winning streak since 2010 as China moved to rein in the currency’s rise by scrapping an extra fee for betting against it in the derivatives market.

China’s yuan slipped on Friday after rising in the last 10 sessions, its longest run of gains since September 2010. That’s after the People’s Bank of China said in a statement it will remove the reserve requirement of 20% on foreign-currency forward contracts from March 2.

The change lowers the cost for market participants to bet against the yuan via derivative contracts with banks. The move will “support companies’ management of foreign-exchange risks,” the PBOC said in the statement.

The shift aims to check the yuan’s strength after it reached multi-year highs against a softening dollar. Officials have repeatedly warned against overshooting of the exchange rate as it would pressure local exporters and worsen deflation.

“This is one of the tools expected to be utilized to slow the appreciation of the yuan against the dollar,” said Fiona Lim, strategist at Maybank in Singapore. “The PBOC is sending a clear messaging with its recent fix that although the central bank does not oppose yuan gains, the pace should be curbed.”

The onshore yuan edged down 0.1% to around 6.86 per dollar on Friday morning in Shanghai after rallying to the strongest level since April 2023 in the last session. Robust foreign-exchange conversion, an improving US-China relationship, and broad weakness in the greenback have supported yuan appreciation.

Some state banks briefly purchased dollars in early trading and a few proprietary desks pared short dollar positions, according to traders. However, exporters’ settlement flows kept the market broadly balanced, said the traders who asked not to be named as they are not allowed to speak publicly.

These market maneuvers unfolded against the backdrop of broader policy signals.

The PBOC has been setting a string of weaker-than-expected daily reference rates for the currency to resist a sharp appreciation. The so-called fixing limits the yuan’s move by 2% on either side.

On Friday, the central bank set the daily reference rate for the currency 793 pips weaker than the average forecast in a Bloomberg survey. That marked a record deviation on the weaker side, signaling the PBOC’s preference to slow the currency’s gains.

What Bloomberg Strategists Say...

The central bank isn’t putting an end to yuan gains, but wants to remind FX traders it doesn’t like seeing dollar-yuan turning into a one-way bet.

—Mark Cranfield, Markets Live strategist

The central bank has been adjusting the reserve requirement on foreign-exchange forward contracts since at least 2015. The PBOC last used this tool in 2022, when it re-imposed the charge on forwards to prop up the yuan against depreciation pressure.

The PBOC also pledged on Friday that going forward it will keep the yuan exchange rate stable at reasonable, equilibrium levels and guide financial institutions to improve FX hedging services.

The removal of charges for betting against the currency represents an unwinding of earlier measures the PBOC had introduced to slow yuan depreciation, said Eddie Cheung, senior emerging markets strategist at Credit Agricole CIB Hong Kong Branch. “So arguably we’re back at neutral.”

Read: Here Are the Tools That China Uses to Manage the Yuan: QuickTake

While the central bank’s latest moves shows Beijing’s desire to closely manage the yuan, it’s unclear if policymakers would further rein in yuan bulls. That’s because intervention in the foreign-exchange market carries a cost for Beijing.

The US Treasury in a January report characterized the yuan as “substantially undervalued” and urged China to allow a timely and orderly appreciation. Modest yuan strength is expected to help China reduce trade tensions with the rest of the world, after its trade surplus surged to $1 trillion in 2025.

Calls have also grown among local researchers that a strong yuan could help re-balance the Chinese economy as exports soar and domestic demand recovery lags. Chinese President Xi Jinping’s vision of “a powerful currency” and Beijing’s ambition to internationalize the yuan are also seen supporting a strengthening bias for the currency over the long term, especially if the greenback stays under pressure.

Currency-option markets are showing increased bets on yuan strength, with traders positioning for a move toward 6.50 per dollar by year-end.

“I do think there is quite a bit of room for the yuan to strengthen,” Maybank’s Lim said.  “The action today is meant to slow that.”

--With assistance from Qizi Sun and Ran Li.

(Updates with details throughout.)