China’s currency headed for its biggest two-day gain against the dollar since January on Thursday afternoon, as the central bank apparently intervened to support the renminbi amid tepid market demand for the Chinese currency.
Traders said that large state-owned banks sold dollars aggressively on Wednesday and Thursday. Such concerted trading is that is usually viewed as a sign that these institutions are acting on behalf of the central bank to prop up demand for the renminbi.
The People’s Bank of China’s currency-trading arm last week announced a change to the way it sets renminbi’s daily fix, which is intended to guide trading in the spot market. The change granted the PBoC greater flexibility to push back against what it called “irrational expectations” and guide the renminbi stronger, even when market forces are pushing the other way.