The Chinese yuan depreciated by almost two percent against the US dollar during August. Most of the weakening has occurred in recent days. The Chinese regulator has therefore urged several domestic banks to stop divesting the yuan.
Yuan at its lowest
The yuan is trading at its lowest levels against the US dollar in two years these days. In August alone, the Chinese currency lost nearly two percent of its value against the US currency.
China is reacting
And it is this that has likely prompted China’s foreign exchange regulator to call on several Chinese banks to stop selling the yuan. Citing well-informed sources who wished to remain anonymous, Reuters reported. “The over-voluminous dollar buying ended with a phone call from central bank officials,” one source said. And four others spoke of similar experiences.
But China’s State Administration of Foreign Exchange has dismissed such activity, saying the yuan is stable, as are expectations for future developments. “This helps the yuan to hold the exchange rate at a basically stable and rational level,” the bureau told Reuters.