CCP Orders State-Owned Banks to Dump US Dollars to Curb Devaluation of CNY

On September 29, according to insider, the Chinese Communist Party (CCP) has asked major state-owned banks to prepare for a massive reduction in their US dollar holdings while rushing to buy offshore RMB to curb the continued devaluation of the CNY.

It is reported that the CCP has asked the offshore branches of state-owned banks, including those based in Hong Kong, New York, and London, to review their offshore RMB holdings and deploy their USD reserves. While insider said the scale of this round of USD dumping is huge, the total amount of this USD dumping remains uncertain as the trend of the CNY is largely dependent on the trend of the USD, and the US Federal Reserve’s tightening trajectory.

So far this year, the CNY has fallen by more than 11% against the USD. The CCP has a long-standing habit of manipulating the exchange rate. Recently, the CCP authorities have also taken other intervention measures, including oral warnings about CNY speculation, and increasing the cost of shorting sale the CNY.