© Reuters. Illustration photo of U.S. Dollar and China Yuan notesSHANGHAI (Reuters) – China’s major state-owned banks have been swapping U.S. dollars for yuan this week, traders said on Thursday, suggesting mainland monetary authorities are trying to rein in their appreciating currency.
Those operations in the onshore currency swap market have caused the value of the yuan to fall in the forward market, dampening expectations for it to appreciate, and simultaneously making it more expensive for investors to borrow yuan.
Two traders Reuters spoke to also said they saw big state banks buying dollars in the onshore spot market during late night trading sessions to effectively prevent the yuan from strengthening too fast.
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