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China state banks sell dollars after Fed rate hike: traders
December 15, 2016 / 3:39 AM / a year ago

China state banks sell dollars after Fed rate hike: traders

SHANGHAI (Reuters) - Chinese state-owned banks were seen selling dollars in the onshore foreign exchange market on Thursday, two traders said, as the yuan fell after the U.S. Federal Reserve raised the target federal funds rate for the first time since December 2015.

U.S. 100 dollar banknotes and Chinese 100 yuan banknotes are seen in this picture illustration in Beijing, China, January 21, 2016. REUTERS/Jason Lee/Illustration/File Photo

“Major state-owned banks were selling dollars in morning trade, as expected,” said a trader at a Chinese bank in Shanghai. A second trader at a major Chinese bank also witnessed the dollar sales by state-owned banks.

State-owned banks have offered dollar liquidity regularly over the past two months in what traders believe is part of efforts to support the Chinese yuan CNY=CFXS from falling too fast.

Reporting By Winni Zhou and John Ruwitch in SHANGHAI, Michelle Chen in HONG KONG; Editing by Richard Borsuk

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