PBOC Tightens Dollar Purchasing Oversight
(11 September 2023 – China) The People's Bank of China (PBOC) is increasing oversight of major dollar purchases by domestic firms amid rising RMB depreciation pressure.
Domestic corporates purchasing US$50 million or more must now seek approval from China’s central bank which convened a meeting with commercial banks to discuss the matter. The PBOC has warned some lenders of their huge dollar purchases on behalf of their corporate clients
A spokesperson said the recent yuan depreciation has been too severe and analysts anticipate the yuan to trend lower beyond 7.5 per USD.
“The offshore renminbi, the CNH, is starting to find some support and this largely looks down to developments in money markets. While the Chinese currency has been seen as a popular funding currency this year, it looks like Chinese authorities might be trying to intervene in money markets to make funding more expensive” commented ING Head of FX Strategy, Chris Turner.
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