China’s central bank asks state lenders to reduce dollar purchases: sources
China’s central bank will not allow sharp renminbi declines and has asked major state-owned banks to reduce US dollar purchases, people with direct knowledge of the matter said on Wednesday (Apr 9).
The directive from authorities comes as the renminbi faces heavy downward pressure following massive US tariffs on Chinese exports and retaliatory moves by Beijing.
The People’s Bank of China (PBOC) sent the window guidance, which is its informal style for managing policy around markets, to state banks this week, asking them to withhold US dollar purchases for their proprietary accounts, three sources said.
Big banks were also told to step up checks when executing US dollar purchase orders for their clients, one of them said, in a move markets interpret as a way for the central bank to curb speculative trades.
The country’s big state banks were seen selling US dollars and buying renminbi aggressively to slow the pace of renminbi declines in the onshore spot market on Wednesday, two separate sources said.
China’s renminbi has lost about 1.3 per cent so far this month and was last at 7.35 per US dollar on Wednesday, while its offshore counterpart hit a record low overnight.
Source: Businesstimes
