Offshore yuan clearing banks and related offshore participant banks have had their trading in bond repos and account finance suspended by the central bank, said people with direct knowledge of the matter.
That move would limit the transfer of funds outside of the country, restricting capital outflows and contributing to holding the exchange rate stable as China tries to hold the yuan flat in the run-up to the International Monetary Fund's decision on whether to include the currency in its reserve basket.
“We received window guidance from the central bank on Friday,” a person at an offshore yuan clearing bank said. “We have already temporarily suspended trade in yuan account financing and bond repurchases with onshore banks.”
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Faxes and calls to the People’s Bank of China (PBOC) requesting comment were not immediately answered.
A trader at a Chinese commercial bank in Shanghai said the action “may have an impact on forward contracts trading and the spot price of onshore yuan, because the yuan supply in offshore market will decrease.”
The move would mark an intensification of efforts to keep people from selling off the yuan, which has come under pressure as China has cut interest rates while the United States is preparing to raise them.