China’s Central Bank Urges Major State-owned Banks to Reduce Dollar Purchases
China’s central bank has recently intervened to stabilize the yuan’s value, which has been under significant pressure. With the U.S. trade war intensifying, the People's Bank of China (PBOC) moved to limit excessive currency fluctuations.
The move, however, aims to balance the yuan’s value without triggering major instability in the market.
This week, PBOC instructed state-owned banks to halt additional purchases of U.S. dollars. The directive seeks to curb speculative trading in the foreign exchange market, which could worsen the yuan’s decline. Financial institutions were also told to carefully check their dollar-buying orders for clients.
On Wednesday, after the intervention, the yuan managed to recover slightly, giving the market a brief respite. The onshore yuan’s value was measured at 7.35 per dollar, while the offshore yuan reached a record low.
PBOC Aims for Controlled Depreciation, Not Drastic Drop
Despite the pressure on China’s exports, the PBOC has made it clear it won’t allow a sharp devaluation. A drastic drop in the yuan would only undermine market trust and encourage capital flight. However, the central bank is open to a gradual depreciation to help maintain export competitiveness.
Alongside managing the yuan, China plans to support key industries through various financial strategies, including subsidies and tax rebates. These actions are intended to offset the impact of U.S. tariffs, which have now escalated to a staggering 104% on Chinese goods.
China Maintains Focus on Market Stability Amid Trade Strains
The PBOC’s moves reflect its priority of stabilizing financial markets. As the trade war with the U.S. worsens, China’s response focuses on maintaining currency stability and managing export challenges. The central bank intends to keep the yuan’s movement in check while reducing the risk of further economic harm.
The Chinese government, alongside PBOC, continues to monitor the situation closely. Its focus is to avoid excessive fluctuations while positioning the economy to deal with external trade pressure.
Alex is Editor-in-Chief of Coindoo and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
