China’s major state-owned banks have been actively selling U.S. dollars to purchase yuan in both onshore and offshore spot foreign exchange markets this week, according to individuals with direct knowledge of the situation. This move is aimed at slowing down the depreciation of the yuan.
While state banks also engage in trading for their own purposes or to fulfill clients’ orders, they often act on behalf of the central bank when the yuan is facing pressure, as it is currently.
“State bank dollar selling has become a regular practice to slow down the pace of yuan depreciation,” stated a trader based in Shanghai.
Sources with direct knowledge of the matter also revealed that offshore branches of state banks were selling dollars during London and New York trading hours this week.
This dollar selling activity could help limit the decline of the offshore yuan and prevent it from deviating too much from its onshore counterpart.
Since the beginning of this month, the yuan has depreciated by approximately 2.4% against the dollar and 6% since the start of the year. The onshore yuan…
2023-08-16 21:15:04
Link from finance.yahoo.com
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