December 5, Shanghai (Reuters) – It has been noted that significant Chinese state banks are trading yuan for dollars. These state banks, notably the Agricultural Bank of China, were reportedly spotted selling these currencies on the spot market on Tuesday in an effort to boost the yuan, according to people with knowledge of the situation.
State Bank’s action coincides with one of the strongest months of the year, November, when the Chinese yuan gained 2.55% versus the US dollar. It is still 3% down year-to-date, though.
According to sources, State Bank’s initiatives are intended to hasten the yuan’s recovery and increase exporters’ confidence in their ability to settle their foreign exchange receipts in local currency by year’s end.
Although the central bank frequently provides instructions to China’s State Bank when it operates in the interbank market, the bank is now actively participating in trade.
According to Reuters, significant banks were observed making comparable transactions at the end of the previous month, supporting the yuan against the depreciating US dollar.