SHANGHAI/BEIJING (Reuters) – China’s major state-owned banks moved to tighten yuan liquidity in the offshore foreign exchange market on Monday, actively selling U.S. dollars onshore, four sources with knowledge of the matter said.
The goal was to prevent the yuan from falling too fast as China’s A shares plunged, said one of the people.
Offshore yuan tomorrow-next forwards jumped to a more than two-month high of 4.25 points, reflecting signs of tighter liquidity conditions.
The benchmark Shanghai Composite index lost 2.7% on Monday, posting the biggest one-day drop since April 2022. [.SS]
State banks often act on behalf of China’s central bank in the foreign exchange market, but they could also trade on their own behalf or execute clients’ orders.
(Reporting by Shanghai and Beijing Newsroom; Editing by Kirsten Donovan)
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