China’s state banks seen acquiring dollars in swaps market to stabilize yuan – sources

SHANGHAI  – China’s major state-owned banks were spotted swapping yuan for U.S. dollars in the forwards market and selling those dollars in the spot market on Monday morning, six banking sources said.

The selling seemed to be aimed at stabilizing the yuan, with the swaps helping procure dollars as well as anchoring the price of yuan in forwards, the sources, who have direct knowledge of market trades, told Reuters.

The yuan is down 11.6 percent versus the dollar this year. It was trading around 7.1980 per dollar on Monday, while the one-year forwards had fallen to 6.95.