26th May 2023 – (Beijing) China’s major state-owned banks were reportedly selling dollars in the onshore spot foreign exchange market from Thursday through Friday to slow the decline of the yuan, according to sources with knowledge of the matter.
This move to sell dollars appeared to have slowed the pace of the yuan’s decline, as the big banks did not forcefully cap the currency at any particular levels, according to one of the sources.
Another source stated that the big banks began to offer dollars as the offshore yuan neared the 7.1 per dollar mark on Thursday.
The selling of dollars helped to rebound both the onshore and offshore yuan. As of 0334 GMT, the onshore yuan was trading at 7.0591 per dollar, compared to the previous close of 7.0795, while its offshore counterpart was standing at 7.0730 per dollar.
State-owned banks in China typically trade on behalf of the central bank in the foreign exchange market, but they can also trade on their own behalf.
The move by the state-owned banks to sell dollars comes amid ongoing tensions between the U.S. and China over trade and other issues. The Trump administration has accused China of manipulating its currency to gain an unfair advantage in trade, and has threatened to impose tariffs on Chinese goods in response.