16:47 - 4.12.2025

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December 4, Fineko/abc.az. China's large state-owned banks are trying to curb the yuan's rise by actively buying US dollars at the domestic spot market.

ABC.AZ informs that these measures were taken after the yuan reached a 14-month high on Wednesday.

But unlike the usual trading strategy, it seems that banks have not returned dollars to the swap market. Market sources said that this could be aimed at reducing dollar liquidity and, as a result, making long-term interest rates on the yuan more expensive. As a result, the domestic dollar/yuan swap rate decreased, which, compared with last week's monthly high, indicates further deepening of the negative trend in the annual positioning of the yuan.

After Reuters published information on the operations of state-owned banks, the yuan weakened slightly to the level of 7.072 against the dollar.

The weakening of yuan's growth rate makes it difficult to hold long positions, as profits do not compensate for the percentage difference between the dollar and the less profitable yuan.

State-owned banks sometimes conduct transactions on behalf of the Central Bank, but they can also trade independently or perform tasks for their clients. The People's Bank of China did not respond to a request for comment on this matter.