Chinese banks are quietly buying and "hoarding" US dollars.

(Dan Tri Newspaper) - This is seen as an "unusual" attempt to curb the power of the Chinese yuan.

Amidst the yuan's surge to a 14-month high, major Chinese state-owned banks are employing an "unusual" tactic: buying up US dollars on the spot market but not putting them back into circulation.

According to Reuters , this move is seen as a calculated attempt to cool down the overheating of the domestic currency. The unusual aspect is that, after purchasing the USD, these banks did not perform a swap operation to return the USD to the financial market as is customary, but instead chose to completely "hoard" it.

Observers believe that this deliberate hoarding of foreign currency aims to create a localized shortage of USD supply. The consequence is that the cost of capital is driven up, directly impacting the pockets of speculators holding long positions in the yuan (waiting for the price to rise), forcing them to be more cautious.

Chinese banks are quietly buying USD (Photo: IT).

Some financial experts believe that this intervention by state-owned banks is not aimed at reversing the upward trend of the yuan, but mainly at regulating the rate of increase and avoiding shocks that could destabilize the market.

This surge in USD purchases coincides with the Chinese yuan's strong performance. As of December 4th, the currency had risen approximately 3.3% against the USD since the beginning of the year and was on track for its largest year-on-year gain since 2020. On December 3rd alone, the CNY reached its highest level in 14 months.

Despite interventions to curb the excessive rise, the yuan's upward trend has received "tacit approval" from Beijing. The daily central reference rate has consistently been set higher than expected, indicating that Chinese officials want to maintain stability to encourage the internationalization of the currency and prevent export businesses from panicking and buying up the yuan en masse.

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