SHANGHAI/BEIJING — Dollar selling by China’s major state-owned banks strengthened the yuan to below 6.9 per dollar on Wednesday, foreign exchange traders said, possibly signaling official discomfort with the Chinese currency’s recent weakness.
Such banks often act at the behest of the People’s Bank of China (PBOC).
The yuan is hovering near two-year lows, and is set to log its largest monthly loss since April, but it strengthened steadily since mid-morning on Wednesday to end the domestic trading session, at 4.30 p.m. (0830 GMT), at 6.8095 per dollar.
Four currency traders said the state-bank trading drove the move, which seemed aimed at forcing the onshore close below 6.9.
“Movements after 4 p.m. were purely reflecting regulators’ intentions,” one of the traders told Reuters. All requested anonymity because they are not authorized to speak publicly.
Chinese officials have been quiet about the yuan’s fall through August, which has reflected both a broadly stronger U.S. dollar and growing market concern at China’s economic outlook.
Reuters reported last week that regulators warned some banks against selling yuan and for six days in a row the PBOC has fixed the midpoint of the yuan’s trading band at stronger-than-expected levels against the dollar.
(Reporting by Shanghai and Beijing newsrooms; Writing by Tom Westbrook; Editing by Simon Cameron-Moore)