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Companies that need to purchase $50 million or more will now
need approval from the People's Bank of China (PBOC), which
convened a meeting with some commercial banks over the weekend
on the matter, the sources said.
"The approval process will be extended," said one of the
sources.
"The recent yuan depreciation has indeed been too severe, and
many now expect the yuan to weaken beyond 7.5 per dollar."
The central bank has warned some lenders of their huge dollar
purchases on behalf of their corporate clients, according one of
the other sources.
The directive is being issued as the Chinese yuan has declined
by about 6% against the U.S. dollar so far this year, falling to
levels that were last seen during the 2008 global financial
crisis. [CNY/]
The PBOC had no immediate comment on plans to increase its
scrutiny of dollar purchases when contacted by Reuters.
China has in recent weeks stepped up its efforts to slow the
pace of yuan declines by setting persistently
stronger-than-expected midpoint fixings. Earlier this month, it
announced it would increase the supply of dollars by lowering
the amount of foreign exchange that banks must set aside.
Sources told Reuters last month that China's currency regulators
asked some banks to reduce or postpone their purchases of U.S.
dollars in order to slow the yuan's depreciation.
In the meantime, state-owned banks were seen selling dollars in
both onshore and offshore markets and mopping up yuan liquidity
in the offshore foreign exchange market to raise the cost of
shorting the Chinese currency.
On Monday, China's foreign exchange self-regulatory body said it
would resolutely fend off risks of the yuan overshooting and
pledged to take action when needed to correct one-sided and
pro-cyclical activities, according to a statement published by
the PBOC.
(Reporting by Beijing and Shanghai Newsroom; Editing by
Christian Schmollinger and Christina Fincher)
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