In a bid to support the weakening yuan, China’s central bank will issue a record amount of offshore Chinese yuan bills in Hong Kong this month, according to reports from mainland media. This move aims to defend the currency against ongoing pressure from fluctuating exchange rates.
The People’s Bank of China (PBOC) has noted “robust demand” for high-quality yuan-denominated bonds from international investors, prompting the decision to release more offshore bills, sources familiar with the central bank’s strategy told Yicai. The scale of the upcoming issuance is expected to be significantly higher than previous efforts, reflecting PBOC’s commitment to stabilizing the yuan’s exchange rate.
The Chinese yuan has recently fallen above the 7.30 level per US dollar, reaching 7.32 early this morning — its weakest point since 2007. The PBOC has been actively addressing the currency’s volatility, with Financial News, a publication under the central bank, stating that the PBOC has sent a “clear signal” of its intention to stabilize the yuan.
The offshore yuan showed signs of strengthening, rising as much as 2% to 7.3454 per dollar in early trading, before retreating to below the 7.35 threshold. In a related move, the PBOC also set the reference exchange rate for the yuan against the US dollar at 7.1876, the highest in about two weeks, signaling further efforts to manage the currency’s value.
This action highlights the central bank’s determination to prevent further depreciation of the yuan as it faces growing global economic pressures.
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