US dollar and Chinese yuan banknotes are shown in this illustration from January 30, 2023. Portal/Dado Ruvic/Illustration/File Photo Acquire License Rights
SHANGHAI, Dec 5 (Portal) – China’s major state banks were seen on Tuesday swapping yuan for U.S. dollars in the onshore swap market and selling those dollars in the spot market to support the yuan, two with the said Matter familiar sources.
The state banks’ moves come as China’s yuan gained 2.55% against the dollar in November, its best month this year. However, it is still down 3% since the start of the year.
The sources said they believed the state bank’s moves were aimed at accelerating the yuan’s recovery and encouraging domestic exporters to settle their foreign exchange earnings in the local currency towards the end of the year.
Chinese state banks often act in the foreign exchange market on behalf of the country’s central bank, but also act on their own behalf.
According to Portal, major banks were spotted conducting a similar trade late last month, helping the yuan’s recovery against a generally weaker U.S. dollar.
reporting by Shanghai Newsroom and Tom Westbrook; Editing by Jacqueline Wong
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