China's central bank has asked major state-owned banks to be prepared to sell dollars for the local unit in offshore markets as it steps up efforts to stem the yuan's descent, four sources with knowledge of the matter said.
State banks were told to ask their offshore branches, including those based in Hong Kong, New York and London, to review their holdings of the offshore yuan and ensure U.S. dollar reserves are ready to be deployed, three of the sources, who declined to be identified, told Reuters.
The simultaneous selling of dollars and buying of yuan could put a floor under the Chinese currency, which has lost more than 11% to the dollar so far this year and looks set for its biggest annual loss since 1994, when China unified its official and market rates.
The scale of this round of dollar selling to defend the weakening yuan will be rather big, one of the sources said.
The People's Bank of China did not immediately respond to a Reuters request for comment. (Reporting by Julie Zhu in Hong Kong, and Shanghai & Beijing newsrooms; Editing by Vidya Ranganathan and Hugh Lawson)