Business Express is an online portal that covers the latest developments in the world of business and finance. From startups and entrepreneurship to mergers and acquisitions, Business Express provides reporting on the stories that matter most to business leaders and decision-makers.The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
2023 06 27T030810Z 1 LYNXMPEJ5Q02T RTROPTP 4 GLOBAL MARKETS VIEW ASIA | Business Express

China’s state banks seen selling dollars offshore to slow yuan drop – sources

China’s state banks seen selling dollars offshore to slow yuan drop – sources

SHANGHAI/BEIJING (Reuters) -China’s major state-owned banks were seen selling dollars in the offshore spot foreign exchange market on Tuesday, four sources with knowledge of the matter said, suggesting authorities wanted to slow the pace of the yuan’s recent slide.

Such state bank dollar selling appeared as the offshore yuan weakened towards the psychologically important 7.25 per dollar level, two of the sources said.

“The 7.25 (yuan per dollar) level remains a key threshold,” said one of them, adding a breach of the level could quickly send the yuan to lows last seen in 2022.

The yuan’s value onshore hit a trough of 7.3280 per dollar in November, levels last seen during the 2008 global financial crisis, while the offshore yuan dropped to a record low of 7.3746.

State banks usually act on behalf of the country’s central bank in the foreign exchange market, but they could also be trading on their own behalf or their clients.

To double down on its defence, the People’s Bank of China (PBOC) set the daily yuan fixing rate stronger than market expectations for the second day in a row earlier on Tuesday, spurring speculation authorities are becoming less tolerant of the currency’s weakness.[CNY/]

Several currency traders also said they saw state banks selling dollars on Monday just ahead of the onshore domestic close (0830 GMT) to shore up the yuan’s closing price, as the rate could determine the next day’s official guidance rate.

Don't miss out on any breaking news or insightful opinions!
Subscribe to our free newsletter and stay updated on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

“The (trading) desk saw strong selling in swaps across tenors in pre-market trade, likely sterilising spot intervention in the past few sessions,” UBS said in a note, referring to buy/sell trades in the forwards market to acquire the U.S. dollars the big banks need to procure for sales in spot transactions to defend the yuan.

The broad yuan weakness has been driven by China’s faltering post-pandemic economic recovery and widening yield differentials with the United States as the Federal Reserve continues to hike interest rates. The yuan has slid more than 4% against the dollar so far this year.

With most non-dollar currencies weakening to reflect the greenback’s strength in global markets, the yuan’s value against its major trading partners dipped to a week’s low of 96.54 on Tuesday — taking its year-to-date loss against that basket to 2.16%, according to Reuters calculation based on official data.

(Reporting by Shanghai and Beijing Newsroom; Editing by Kim CoghillEditing by Vidya Ranganathan and Kim Coghill)

 

Recent Post: