Overview
- Major state-owned lenders bought and held dollars in the onshore spot market this week to restrain the currency’s advance, according to Reuters sources.
- The dollars were not recycled into swaps, a tactic that tightened greenback liquidity and increased the cost of long-yuan positions.
- The moves sought to slow rallies rather than overturn the strengthening trend, with the yuan slipping to about 7.0694 after a softer midpoint on Thursday.
- Recent central bank fixings have guided a stronger currency overall, and Reuters estimated Friday’s reference rate at roughly 7.0751.
- The yuan has gained about 3.3% against the dollar this year, putting it on track for the biggest annual rise since 2020 as offshore funds keep positioning for further strength.