China’s major state-owned banks have been observed actively selling dollars in the offshore spot market during early Asian trades on Thursday, according to sources familiar with the matter.
The purpose of this state bank dollar selling is to slow down the pace of yuan declines, said one of the sources.
In addition to this, China’s central bank announced a relaxation of a cross-border financing rule, making it easier for domestic firms to raise funds from overseas markets. This move aims to ease the depreciation pressure on the yuan currency.
The offshore yuan has strengthened by more than 0.7 percent, reaching a high of 7.1812 per dollar before settling at 7.1890 as of 0249 GMT.
In the onshore market, the yuan also experienced a similar upward bounce. However, it is still down by about 4 percent against the dollar year-to-date, making it one of the worst performing Asian currencies in 2023.
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