(Add trader comments, details and background)
SHANGHAI / BEIJING, Dec. 31 (Reuters) – Major state-owned banks were seen buying U.S. dollars at a rate of around 6.52 yuan on Thursday, traders said, in a move seen as an attempt to tarnish the local currency. keep from rising too fast. and breaking a key stage.
The spot market opened on land at 6.5204 per dollar and rose to a one-time high of 6.5148 in morning trading, the highest level since June 22, 2018.
State bank action quickly pulled the Yuan to the weaker side of 6.52 per dollar, four traders told Reuters.
“Two state banks are bidding at that level today,” said one of the traders.
For the year, the Yuan has valued at nearly 7% and is expected to post its first annual gain in three.
Another trader said big banks started buying the green back whenever the spot price rose beyond 6.52, adding that the move could be an attempt by authorities to control the pace of appreciation Yuan through state banks.
Traders added that 6.52 is widely seen as the top for the Yuan for now. A break of that level could push the Yuan above the key level of 6.5, perceived by markets as a new red line for authorities.
A third trader said a break of 6.52 could trigger an uptrend of some currencies including options, which would force the Yuan to strengthen beyond the 6.5 per dollar level.
Sources told Reuters earlier this month that Chinese policymakers were comfortable with the rise of the Yuan to 2 1/2 year highs as a reversal in the world’s second-largest economy accelerates.
But the central bank could take action if there is a rapid rise in the country’s tightly regulated export money.
The weaker U.S. dollar, the widening production gap between China and the United States and China’s effective coronavirus restriction have underpinned the Yuan, causing it to rise about 10% against the dollar since its last dollar. May.
State-run banks are believed to be trading on behalf of the central bank in the country’s foreign exchange market, but could trade on their own behalf.
Reporting by Shanghai and Beijing Newsroom; Edited by Clarence Fernandez and Sam Holmes