China Tells State Banks To Prepare For A Massive Dollar Dump

Chinese Yuan banknotes are seen in this illustration taken February 10, 2020. REUTERS/Dado Ruvic/Illustration 

Market Insider: China tells state banks to prepare for a massive dollar dump and yuan buying spree as Beijing's prior interventions have failed to stem its currency's worst year since 1994 

* Reuters reported that China told state-owned banks to get ready to sell dollars and buy yuan in an effort to prop up the local currency. 

* The move could stem the yuan's fall, as it remains on track for its largest annual loss against the dollar since 1994. 

* A hawkish Fed has pushed the dollar to 20-year highs this year, pressuring currencies around the world. 

The People's Bank of China has told major state-run banks to prepare to shed dollar holdings while snapping up offshore yuan, which has continued to fall despite prior interventions, sources told Reuters. 

The scale of this latest effort to prop up the yuan will be big and could provide a floor to the Chinese currency, according to the report. 

The amount of dollars to be sold hasn't been decided yet, but Reuters said it will primarily involve the state banks' currency reserves. Their offshore branches, including those based in Hong Kong, New York and London, were ordered to review offshore yuan holdings and check to see that dollar reserves are ready.  

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Update: Exclusive: China's state banks told to stock up for yuan intervention (Reuters).  

WNU Editor: IMHO there are three reasons why China will start to dump the US dollar. (1) The first is to prop up the yuan. (2) The second is to not possess US dollar reserves. China saw how the U.S. seized Russia's foreign currency holdings, and Beijing does not want to be positioned to have the same thing happen to them. (3) The third reason is that many in China believe the U.S. economy is on the road to a slow collapse, and what better way to bail-out is when the US dollar is as high as high as it is right now .... Is the US economy about to tank? (Gregory K. Tanaka, China Daily).