China’s central bank is taking steps to limit further weakness in the yuan, instructing major state-owned banks to curb their U.S. dollar purchases and tighten scrutiny on foreign exchange transactions, citing sources with direct knowledge of the matter.

The move comes amid growing pressure on the currency, which has fallen roughly 1.3% this month and was trading around 7.35 per dollar on Wednesday.

The offshore yuan briefly touched a record low overnight, reflecting concerns over heightened U.S.-China trade tensions following new U.S. tariffs and Beijing’s retaliatory measures.

The People’s Bank of China (PBOC) issued informal guidance—known locally as window guidance—to banks this week, asking them to avoid buying dollars for their own accounts.

The report added that banks were also told to increase scrutiny when processing dollar purchase orders for clients, a measure seen by markets as aimed at discouraging speculative trading.

Source: Investing