SHANGHAI (Reuters) – Major Chinese state-owned banks have been seen busy selling U.S. dollars to buy yuan on onshore and offshore spot foreign exchange markets this week, people familiar with the matter said, in a bid to stem rapid losses in the yuan. .
State banks usually act on behalf of China’s central bank in the country’s foreign exchange market, but they can also trade on their behalf or execute orders for their clients.
Two sources familiar with the matter said on Thursday that overseas branches of the country’s banks were seen selling dollars during trading hours in London and New York this week.
Selling the dollar could limit this decline in the offshore yuan and prevent it from diverging too far from its onshore counterpart.
On the other hand, two separate sources said that state banks offered dollars in the internal foreign exchange markets.
One of the sources said the dollar sale was mainly to “control the pace of the yuan’s depreciation”.
The local yuan was trading at 7.3096 against the dollar as of 0205 GMT, while the external yuan was last quoted at 7.3356.
(Reporting by Shanghai Newsroom; Editing by Jacqueline Wong)