China’s steps to curb yuan depreciation.

China’s State-Owned ​Banks Take Action to Stabilize‍ Yuan

In recent weeks, China’s major state-owned banks ⁢have been actively‌ involved in both onshore and offshore⁣ foreign exchange markets to address the rapid decline of the yuan. ⁢According to sources, these banks were seen mopping up offshore ‌yuan liquidity⁣ on Monday.

State banks often​ act on behalf of ⁢China’s central bank ​in both onshore and offshore foreign exchange markets, but they could also trade on their own behalf or‍ execute their clients’ orders.

The ⁢yuan has experienced a loss of more than 5% ⁣against ⁤the⁤ dollar, making it one of the‌ worst performing ⁢Asian currencies. To combat this, various policy moves ⁣and⁤ measures have been implemented to stem yuan weakness.

Policy Moves and Measures to Stabilize Yuan:

• Aug ⁢22, ‍2023: The People’s Bank of China (PBOC) set‌ the yuan midpoint firmer than market projections,​ indicating concern over its recent weakness.
• Aug ​21, ‌2023: China’s major state-owned banks actively mopped up offshore yuan, raising the cost of shorting the currency.
• Aug 17, 2023: China’s major state-owned banks ‍sold U.S. dollars to buy yuan ‌in both onshore and offshore spot foreign exchange markets.
• Aug 17, 2023:​ Financial News, backed by the PBOC, stated that the yuan’s movements align with economic fundamentals ​and market demand.
• Aug 17, 2023: The⁢ PBOC emphasized the prevention⁤ of yuan exchange rate overshooting‍ and systemic financial risks.
• Aug 9, ⁣2023:​ China’s major ⁤state-owned banks sold U.S. dollars to buy yuan in the onshore spot foreign exchange market.
• Aug 1, ⁢2023: China’s FX regulator affirmed the country’s commitment to maintaining the stability of the ⁢yuan exchange rate.
• July 25, 2023: China’s ​major state-owned banks sold‍ U.S. dollars to buy yuan in both ‍onshore and offshore spot markets.
• July 24, 2023: The Politburo called‍ for measures to stabilize the yuan, improve ⁣capital markets, and⁣ address financial risks.
• July 20,⁢ 2023: China’s major state-owned banks sold dollars to buy yuan in the offshore spot ⁢market.
• July⁣ 20, ​2023: China’s central⁣ bank​ and foreign exchange regulator increased the cross-border macro prudential adjustment ratio.
• July 5, 2023: Foreign investors were⁣ net purchasers of onshore yuan⁤ bonds, indicating stable expectations in ‍China’s foreign exchange market.
• July 4,‌ 2023: China’s major state-owned banks lowered their dollar deposit ⁣rates to counter‌ the‌ yuan’s slide.
• June 29, 2023: China’s major state-owned banks sold dollars for yuan in the onshore spot foreign exchange market.
• June 27, 2023:‍ China’s major state-owned‍ banks⁣ sold dollars in the offshore spot⁣ foreign exchange market to​ slow the yuan’s decline.
• June 6, 2023: ⁢Major⁢ state-owned banks were asked to lower dollar deposit interest rates to support the weakening yuan.
• June 1, 2023: China’s commerce ministry surveyed ‌exporters, importers, and banks ​about their currency strategies ⁣and the impact of⁢ a ⁣weakening yuan.
• May‌ 26, 2023: China’s major ⁣state-owned banks⁤ sold dollars in ‍the onshore ‍spot foreign exchange market.
• May 24, 2023: The yuan is expected to remain stable due to China’s stable economic fundamentals and balance of payments.
• May 19, ​2023: China pledged to curb large ‍fluctuations in the exchange rate⁣ and ⁤strengthen self-regulation of dollar ⁢deposits.

(Compiled by Shanghai NewsroomEditing by Shri Navaratnam)

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