w the yuan’s depreciation.

Although they also trade on their own behalf or to fulfill customer orders, country banks often act at the behest of the central bank when the yuan is under stress, as it is now.

“Selling dollars from state banks has become the new normal to slow down the yuan’s depreciation,” said a Shanghai-based trader.

Two sources familiar with the matter said on Thursday that overseas branches of the country’s banks were seen selling dollars during trading hours in London and New York this week.

Selling the dollar could limit this decline in the offshore yuan and prevent it from diverging too far from its onshore counterpart.

The yuan has lost about 2.4 percent against the dollar since this month, and 6 percent since the beginning of the year. The local yuan was trading at 7.3145 against the dollar as of 0442 GMT, while the offshore yuan was last quoted at 7.3400.

The recent decline in the yuan is a result of China’s widening yield differential with the US, growing investor concerns about weak economic growth in China and increasing default risks in the real estate and shadow banking sectors. (CNY/)

The government’s slowness in implementing stimulus measures to support growth has disappointed investors. Meanwhile, the People’s Bank of China (PBOC) has been easing monetary policy to support the economy, though the price paid for lower interest rates is more pressure on the yuan.

This week, yield spreads between China and the United States widened to their highest levels in 16 years, as investors speculated that the People’s Bank of China (PBOC) would ease policy further after a surprise rate cut this week, even if it put the yuan under more pressure.

Over recent weeks, market watchers say, Chinese authorities have sought to slow the yuan’s decline, with the People’s Bank of China (PBOC) insisting on stronger-than-expected reform and state banks repeatedly selling dollars.