China’s central bank has instructed major state lenders to scale back their purchases of US dollars in a bid to stem the yuan’s rapid decline, according to multiple sources with direct knowledge of the matter. The move is Beijing's latest bid to prevent a sharp depreciation of its currency amid mounting economic pressures stemming from escalating trade tensions with the United States. The People’s Bank of China (PBOC) issued the guidance this week through “window guidance,” an informal policy tool used to guide market behavior without official announcements. State banks were told to avoid buying U.S. dollars for their own private accounts, three people said. One source added that banks were asked to exercise stricter control when executing dollar orders for their clients, which he interpreted as a crackdown on speculative trading. Today, state-owned lenders were seen intervening in the onshore foreign exchange market, selling US dollars and buying yuan to slow the pace of depreciation. The onshore yuan has fallen about 1.3% this month to 7.35 per dollar, while the offshore yuan briefly hit a record low overnight. Related News: After Declines, Donald Trump's Project Also Couldn't Resist: They Started Selling Altcoin, Here's What They Did Despite pressure from U.S. tariffs and Beijing's retaliatory measures, the PBOC has resisted calls to devalue the yuan sharply. Three policy advisers and one banker familiar with the central bank's stance told Reuters any depreciation would be kept modest so as not to shake market confidence. “There will be no sharp depreciation as it could hurt market confidence, but a modest depreciation would help exports,” one of the advisers said. “We should also help key businesses through subsidies, tax rebates or market diversification.” The intervention signals the PBOC's continued prioritization of financial stability as an escalating U.S. trade war with sweeping tariffs, including a 104% tariff on some Chinese goods by President Donald Trump, threatens China's export-reliant economy. A weaker yuan could boost export competitiveness by lowering the price of Chinese goods abroad, but analysts warn that a steep devaluation could trigger capital outflows and jeopardize financial stability. *This is not investment advice. Continue Reading: Tariff War Heats Up: Insiders Reveal China’s New Secret Critical Move
