China's currency regulators are asking some commercial banks to reduce or delay their purchases of US dollars in order to slow the yuan's depreciation, accoroding to Reuters.
The informal instructions are the latest in a series of steps taken by the authorities this year to boost the currency, which has been hit by China's faltering economic recovery after the pandemic and rising returns to the US dollar and other major currencies.
According to “Reuters”, one of the sources said, “The regulators stressed that banks should postpone purchases of dollars from their trading accounts due to the recent decline in the value of the yuan.”
The Chinese yuan reached an 8-month low in July, and has lost 3.6% against the dollar since the start of the year, ranking as one of the worst-performing currencies in Asia.
Chinese authorities have vowed to let market factors dictate the yuan's moves, but their concern was evident last month when the policy-making Politburo made a rare reference to the need for currency stability.
A strong blow to the dollar.. Green is about to incur a second consecutive monthly loss
"The window guidance indicates that the central bank has maintained its stance to support the yuan," said Ken Cheung, chief Asian currency analyst at Mizuho Bank in Hong Kong.
"It also showed that the People's Bank of China has many tools to defend the currency," he added.
"Maintaining non-urgent demand for the dollar may relieve some of the immediate pressure on the yuan," the sources told Reuters.
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