According to a new report from Reuters, BRICS member country, China, has had its state-owned banks sell US Dollars in order to buy yuan. Specifically, the report stated that banks bought yuan” in both onshore and offshore spot markets in early Asian trade,” this week.
The moves were reportedly made in order to “prop up the Chinese currency.” Moreover, the development happened after China pledged to increase economic policy support for COVID-19 recovery. Primarily prioritizing domestic demand and “more stimulus steps.”
China Selling US Dollars for the Yuan
The BRICS countries have undoubtedly seen massive growth in their prominence this year. As the annual summit is fast approaching, the member states are discussing local currency developments and potential expansions. Subsequently, China has taken steps to continue to prop up its own currency.
Specifically, a new report has stated that China-owned state banks have been seen selling US Dollars to buy the Yuan. Indeed, it occurred Tuesday, with three people reporting the moves that took place in early Asian trade. The action aligns with recent policy remarks from top Chinese officials.
Additionally, those officials assured that China would maintain a stable exchange rate. Subsequently, it is promising to restore confidence from investors by jumpstarting the capital markets. Moreover, Reuters reported, “the onshore yuan strengthened more than 0.4% to a high of 7.550 per dollar before fetching 7.1623 as of 0223 GMT.”
A key part of the BRICS alliance’s plan for the near future is the fortification of its local currencies. Therefore, China has continued to strengthen its yuan, something that has also been key in the bloc’s de-dollarization efforts. A key part of their growth plan ahead of the cannula summit taking place in August.