China state banks seen buying dollar to ease sharp yuan rally, traders say

SHANGHAI/BEIJING: China's major state-owned banks were seen buying US dollars at the level of about 6.52 yuan on Thursday, traders said, in a move viewed as an effort to keep the yuan from rising too fast and breaching a key level.

The onshore spot market opened at 6.5204 per dollar and surged to a high of 6.5148 at one point in morning trade, its loftiest since June 22, 2018.

The state bank action quickly dragged the yuan to the weaker side of 6.52 per dollar, four traders told Reuters.

"Two state banks bid at that level today," said one of the traders.

Traders added that the level of 6.52 yuan is widely seen as the ceiling for the market for now. A breach of that level could push the yuan higher over the key rate of 6.5, which markets believe would be a new red line for authorities.