It is being said that China’s currency regulators have in recent weeks asked some commercial banks to either reduce or delay their dollar purchases. This is an informal instruction (of course, naturally) that was meant to slow down the pace of depreciation in the Chinese yuan.

One source added that regulators were even adamant that banks should put off any dollar purchases under their proprietary trading accounts. There has been some stabilisation of sorts in the yuan since the middle of July but if this is all intended just to slow down the drop, it will eventually come one way or another. Indirectly, this is something to watch out for the aussie and kiwi in case there are any spillover effects moving forward.

This article was written by Justin Low at www.forexlive.com.