China’s major banks move to support yuan

China’s major state-owned banks are tightening liquidity in the offshore foreign exchange market to support the yuan, Reuters said on Monday citing four sources with knowledge of the matter.

The banks are actively selling U.S. dollars onshore to prevent the yuan from falling too fast as benchmark Shanghai Composite index declined posting its biggest one-day drop since April 2022 on Monday, down 2.7 per cent.

Offshore yuan tomorrow-next forwards jumped to a more than two-month high of 4.25 points late on Monday (China time), reflecting signs of tighter liquidity conditions.