China’s state banks ramp up US dollar buying to stabilise renminbi: sources

The combined actions of the lenders mark a reversal from last year’s efforts to defend the weakening renminbi

Analysts say the moves aim to stabilise the renminbi as China’s economy weakens ahead of key government policy meetings. PHOTO: REUTERS

Published Fri, Oct 10, 2025 · 06:05 PM

[SHANGHAI/BEIJING] China’s major state-owned banks ramped up US dollar buying in the onshore foreign exchange market in recent weeks, people with knowledge of the matter said on Friday (Oct 10), as analysts said the move was aimed at keeping the renminbi stable.

China’s big banks were also seen acquiring large amounts of renminbi from the swap market, four sources said, pushing up the one-year US dollar/renminbi swap points by Friday to levels last seen in 2022.

The state banks’ combined actions reversed their efforts to defend the weakening renminbi last year, one of the sources said.

While their latest moves could drag down the renminbi’s value, analysts interpreted them as aimed at keeping the Chinese currency stable at a time when the broader economy shows some renewed signs of weakness and ahead of key government policy meetings.

“China has an incentive to maintain a stable renminbi before the upcoming Plenum for the five-year plan, a potential Trump-Xi meeting, and to buffer the likely growing economic pressure in the fourth quarter,” said Gary Ng, senior economist at investment bank Natixis.

The upcoming Fourth Plenum, scheduled for Oct 20 to Oct 23, will outline China’s economic, political and social agenda as well as its development plans for the next five years.

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“Economic data has shown a noticeable cooling trend since August ... Given China is unlikely to rush to follow the (US) Federal Reserve’s rate cuts, the central bank is even less inclined to see the renminbi appreciate excessively,” Shao Xiang, senior macro analyst at Minsheng Securities, said in a note.

Appreciation risks

State banks sometimes act on behalf of the central bank in the country’s foreign exchange market, but they could also act on their own behalf or execute their clients’ orders.

“We generally feel the medium term risks are more towards renminbi appreciation, considering the narrowing US-China yield spread, and the high amount of FX held abroad by Chinese corporates could create buying pressure if the sentiment turns more bullish on the renminbi,” said Lynn Song, chief China economist at ING.