Exclusive: China asks banks to limit some Connect bond outflows

China's central bank has asked domestic banks to scale back their outward investments through the Bond Connect scheme in an effort to contain yuan flows into Hong Kong and limit the supply of yuan in offshore markets, as part of various measures to prop up the Chinese currency.

reuters.com

Relevant topic timeline:

8/21/2023

China's state banks seen mopping up offshore yuan liquidity - sources

China's major state-owned banks are actively acquiring offshore yuan liquidity, raising the cost of shorting the Chinese currency and potentially stabilizing the yuan.

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China Unlikely to Pursue Yuan Devaluation Despite Economic Slowdown

China is unlikely to devalue its currency, the yuan, despite concerns that it could do so to boost exports, as such a move would risk intensifying capital flight and tightening financial conditions, according to the Institute of International Finance. Instead, the focus will be on domestic easing measures to maintain steady growth, although there is the challenge of balancing the yuan's stability against the strengthening US dollar and other major currencies.