China’s major state-owned banks are selling dollars for yuan in foreign exchange markets to slow the depreciation of the national currency, Reuters reported, citing people familiar with the matter. Such dollar selling could slow down the depreciation of the offshore yuan in order to prevent it from deviating much from the domestic rate.
Sources told the publication that state-owned banks can follow the order of the National Bank. The interlocutors of the agency noted that they noticed the activity of banks during the trading period in London and New York.
Now the rates of the domestic and offshore yuan diverge, so Beijing is taking measures to maintain a balance, the agency’s sources say. The internal yuan is controlled by the state, the offshore yuan is determined at the auction. China’s central bank is aiming to have domestic and offshore yuan exchanged at a one-to-one ratio. Since the beginning of the month, the yuan has lost about 2.4% against the dollar, and since the beginning of the year – 6%. Now it is possible to achieve a minimum discrepancy in rates either through further depreciation of the domestic yuan, or through the sale of foreign exchange reserves, the agency notes.
Source: Rosbalt
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