Chinese banks quietly buy and "store" USD

(Dan Tri) - This is considered an "unusual" effort to curb the power of the yuan.

As the yuan (CNY) surges to a 14-month peak, China's major state-owned banks are implementing an "unusual" tactic: buying up US dollars on the spot market but not putting them back into circulation.

According to Reuters , this move is considered a calculated effort to cool down the domestic currency's rapid increase. The unusual point is that after buying, these banks did not perform a swap to bring the USD back to the financial market as usual, but chose to "hold" it completely.

Observers say this intentional hoarding of foreign currency is aimed at making the supply of USD locally scarce. As a result, the cost of capital is pushed up, directly hitting the pockets of speculators who are holding long positions in the yuan (waiting for the price to increase), forcing them to be more cautious.

Chinese banks quietly buy USD (Photo: IT).

Some financial experts believe that this intervention by state banks is not aimed at reversing the upward trend of the yuan, but mainly to regulate the rate of increase, avoiding too rapid shocks that destabilize the market.

The buying spree comes at a time when the yuan is showing exceptional strength. As of December 4, the currency had gained about 3.3% against the USD since the beginning of the year and was on track for its biggest annual gain since 2020. On December 3 alone, the CNY hit a 14-month high.

Despite the intervention to curb overheating, the yuan’s rise has in fact received a tacit approval from Beijing. The daily reference rate has been set consistently higher than expected, suggesting that Chinese authorities want to maintain stability to encourage the currency’s internationalization while avoiding panic buying by exporters.

Source: https://dantri.com.vn/kinh-doanh/cac-ngan-hang-trung-quoc-am-tham-mua-va-cat-giu-usd-20251205105128517.htm