(Yicai Global) June 29 -- China International Capital Corp., one of the country's leading investment banks, has requested the central bank to adjust its policies to stop the yuan's hell ride of weakening. 

If policies remain backward or weak, market sentiment about the yuan is likely to deteriorate, which will make the monetary policy harder to change, the CICC said in a research report.

The yuan's central parity rate against the US dollar fell to 6.6166 this morning as the People's Bank of China continued to devalue the currency. The redback has shed about 3.4 percent of its value against the dollar this month, it's biggest fall since the market exchange rate was unified in 1994. 

Another depreciation threat looms on the horizon as overseas-listed Chinese firms' dividend season falls in July and August, CICC reminded. In the next two months, these companies will pay about USD90 billion in stock dividends, of which Chinese banks make up USD31 billion.

The forex and stock markets' confidence has partly been dampened by the growing trade tension between China and US. The trend of a more stabilized domestic demand would help boost the markets' risk acceptance toward Chinese financial assets, CICC said.

The central bank should reduce financial institutions' reserve ratios or and offer more feasible deleveraging options, so as to ensure the financing demand of real economy is met, CICC suggested. It is also necessary to offer banks a transitional period to phase out non-standard products off their balance sheets, as well as the clearing of local governments' implicit debts while adjusting the tolerance for individual cases of violation.

Editor: Emmi Laine