China Implements Measures to Regulate Dollar Purchases by Major Banks
China's central bank has reportedly instructed major lenders to delay squaring their foreign exchange positions in an effort to alleviate downward pressure on the yuan. Banks have been asked to refrain from immediately closing their positions in the inter-bank foreign exchange markets after selling US dollars to clients until a certain level is reached. This move would absorb some of the heavy dollar purchases by companies and partially reduce the sliding yuan's downward pressure. The directive also includes requiring companies seeking to purchase $50 million or more to seek the central bank's approval. China's yuan has lost over 5% against the dollar this year, making it one of Asia's worst-performing currencies.
