SHANGHAI: China’s yuan declined to a four-month low against the dollar on Friday, breaching a key threshold and prompting state-owned banks to step in to defend the currency.

In the spot market, the onshore yuan fell to the weak side of the psychologically important 7.2 per dollar level to hit a low of 7.24, its softest since Nov. 17, 2023.

Market sources told Reuters that state banks stepped in subsequently to buy the yuan for dollars. The yuan was at 7.2251 by midday, 257 pips softer than the previous late session close.

The sources declined to be identified because they are not authorised to speak publicly about market trades.

The yuan has fallen more than 2% in three months, and has been pressured by growing market expectations of further monetary easing to prop up the world’s second-largest economy as well as a weaker Japanese yen.