Reuters: China central bank orders state banks to sell dollars to support yuan

The People’s Bank of China (Central Bank, Central Bank) ordered the country’s state banks to prepare to sell dollars and buy yuan to support the national currency. This is reported Reuters with reference to several sources.

According to the agency, the Central Bank wants state-owned banks to start buying yuan for dollars from their foreign branches, including those in Hong Kong, London and New York.

The simultaneous purchase of yuan during the sale of dollars should help the national currency strengthen its position, the agency said. The central bank took this measure against the backdrop of a significant depreciation of the yuan against the dollar. Since the beginning of the year, the Chinese currency has sank by more than 11%, and at the end of the year, the fall may turn out to be a record for the last 26 years.

According to agency sources, the scale of the Central Bank’s foreign exchange intervention will be significant. At the same time, the sources do not name the exact volumes, and the Central Bank itself did not respond to a Reuters request.

Kirill Sarkhanyants