China’s major state-owned banks have been active in the currency market this week, buying the yuan and helping hasten its recovery against a broadly weaker US dollar, according to two sources, reports Reuters. The big banks, which sometimes act on behalf of Chinese monetary authorities, have in the past year often sold dollars to slow the yuan’s decline.
Their continued yuan-buying activity this week while the currency was already rising was a surprise to the sources, who spoke on condition of anonymity as they are not authorised to speak to media about the matter.
The yuan has gained 2% in the past week, to stand at levels of around 7.13 to the dollar – its highest in nearly four months. The sources said the state banks seemed to be following their usual combination of swaps and spot market activity, and were seen exchanging yuan for dollars in the onshore swap market and selling those dollars in the spot currency market.