SHANGHAI (Reuters) – China’s major state-owned banks have been active in onshore and offshore foreign exchange markets over the past few weeks in a bid to stem the yuan’s slide.

They were spotted mopping up offshore yuan liquidity on Monday, sources told Reuters.

State-owned banks often act on behalf of China’s central bank in onshore and offshore foreign exchange markets, but they can also trade on their own account or execute client orders.

The Chinese yuan has lost more than 5% against the dollar since the start of the year, becoming one of the worst performing Asian currencies.

Here is a list of measures intended to stem the fall of the yuan after the currency stumbled below the much-watched level of 7 yuan to the dollar in May:

** August 22, 2023

The People’s Bank of China (PBOC) continued to peg the yuan’s exchange rate midpoint higher than market projections, which traders said signals Beijing’s discomfort with the yuan’s recent weakness.

Tuesday’s official guidance was 1.105 pips higher than the Reuters consensus, the widest spread since the yuan began its depreciation cycle.

** August 21, 2023

China’s major state banks have been actively soaking up excess liquidity in the offshore yuan, sources told Reuters, a move that has effectively raised the cost of shorting China’s currency.

** August 17, 2023

China’s major state banks sold dollars to buy yuan in onshore and offshore markets this week, sources told Reuters.

Offshore branches of state banks sold dollars during trading hours in London and New York this week, the sources said.

** August 17, 2023

The yuan’s movements in China are broadly consistent with short-term economic fundamentals as well as market supply and demand dynamics, said the Financial News, a newspaper backed by the People’s Bank of China (PBC). ).

The newspaper reaffirmed that the yuan would return to stable, reasonable and balanced levels in the medium and long term, in line with its fundamentals.

** August 17, 2023

The PBC will resolutely fight against yuan exchange rate misalignment risks and repel systemic financial risks, it said in its second-quarter monetary policy implementation report.

** August 9, 2023

China’s major state banks sold dollars to buy yuan in the foreign exchange market, sources told Reuters.

** August 1, 2023

China has maintained the continuity and consistency of its monetary policy and will continue to maintain the stability of the yuan’s exchange rate, the country’s foreign exchange regulator told Reuters.

** July 25, 2023

Major state-owned banks sold dollars to buy yuan in onshore and offshore markets during early trading in Asia, according to people with direct knowledge of the matter.

** July 24, 2023

The Political Bureau of the Communist Party of China pleaded at a meeting for “proactive” fiscal policy, “prudent” monetary policy, a stable yuan, more buoyant capital markets, measures to defuse growing financial risks and improved business and consumer confidence.

** July 20, 2023

China’s major state banks sold dollars to buy yuan in the offshore market during early Asian trading, according to people with direct knowledge of the matter.

** July 20, 2023

China’s central bank and foreign exchange regulator raised the cross-border macroprudential adjustment ratio for companies and financial institutions from 1.25 to 1.5, making it easier for Chinese companies to raise funds in overseas markets.

** July 5, 2023

The Financial News said in a commentary that foreign investors were net buyers of onshore yuan bonds in June. He added that expectations on China’s foreign exchange market remained stable while cross-border capital flows were basically balanced.

** July 4, 2023

China’s major state-owned banks have cut their dollar deposit rates for the second time in a month, according to people with direct knowledge of the matter, as authorities step up efforts to halt the decline of the yuan.

** June 29, 2023

China’s major state-owned banks sold dollars for yuan, according to people with knowledge of the matter.

** June 27, 2023

China’s major state-owned banks have been selling dollars, people familiar with the matter said, suggesting authorities are keen to slow the pace of the yuan’s fall.

** June 6, 2023

A Chinese banking self-regulatory body, overseen by the central bank, has asked major state banks to lower interest rates on dollar deposits, according to sources with direct knowledge of the matter, in a bid to to fight against the weakening of the yuan.

** June 1, 2023

China’s Commerce Ministry has questioned exporters, importers and banks about their foreign exchange strategies and how the weakening yuan could affect their businesses, sources involved in the survey told Reuters.

** May 26, 2023

China’s major state-owned banks sold dollars in the onshore market for two days, sources familiar with the matter told Reuters.

** May 24, 2023

The yuan is unlikely to experience high volatility as China’s economic fundamentals, balance of payments and foreign exchange reserves are generally stable, the state-run Economic Daily said.

** May 19, 2023

China will resolutely limit large fluctuations in the exchange rate and study the role of self-regulation of dollar deposits, the central bank said.

She added that she would guide expectations, correct procyclical and one-sided behavior where necessary, and curb speculation.

(Compiled by the Shanghai office, Corentin Chapron, edited by Blandine Hénault)

Copyright © 2023 Thomson Reuters