SHANGHAI, June 1 (Reuters) - Major state-owned Chinese banks were seen selling dollars at around the 6.80 per dollar level in the onshore foreign exchange market on Thursday, two traders said, pushing the spot yuan rate to near seven-month highs.
“State banks were selling dollars in the market,” said a trader at a Chinese bank in Shanghai. “And the sudden surge in the yuan caused some panic among bank clients.”
The yuan has now firmed about 1.5 percent against the dollar since May 24, when Moody’s Investors Service downgraded China’s sovereign credit rating for the first time since 1989.
Spot yuan was trading at 6.7933 per dollar as of 0345 GMT.
State-owned banks have sold dollars in the forex market regularly since late last year in what some traders believe is part of official efforts to prop up the Chinese currency. (Reporting by Winni Zhou and John Ruwitch; Editing by Jacqueline Wong)