Exclusive-China's central bank asks state lenders to reduce dollar purchases, sources say

(Reuters) - China's cardinal slope volition not let crisp yuan declines and has asked large state-owned banks to trim U.S. dollar purchases, radical with nonstop cognition of the substance said connected Wednesday.

The directive from authorities comes arsenic the yuan faces dense downward unit pursuing monolithic U.S. tariffs connected Chinese exports and retaliatory moves by Beijing.

The People's Bank of China (PBOC) sent the model guidance, which is its informal benignant for managing argumentation astir markets, to authorities banks this week, asking them to withhold U.S. dollar purchases for their proprietary accounts, 3 sources said.

Big banks were besides told to measurement up checks erstwhile executing dollar acquisition orders for their clients, 1 of them said, successful a determination markets construe arsenic a mode for the cardinal slope to curb speculative trades.

The country's large authorities banks were seen selling dollars and buying yuan aggressively to dilatory the gait of yuan declines successful the onshore spot marketplace connected Wednesday, 2 abstracted sources said.

China's yuan has mislaid astir 1.3% truthful acold this period and was past astatine 7.35 per dollar connected Wednesday, portion its offshore counterpart deed a grounds debased overnight.

Additionally, China's cardinal slope volition not edifice to yuan devaluation to soften the stroke from tariffs connected exports and the wide economy, 3 argumentation advisers and different banker acquainted with the cardinal bank's reasoning told Reuters.

"A crisp depreciation volition not hap arsenic that could wounded marketplace confidence, but a humble depreciation volition assistance exports," said 1 of the argumentation advisers.

"We should besides assistance cardinal enterprises done subsidies, taxation rebates, oregon marketplace diversification."

The onshore yuan rebounded astir 50 pips aft the Reuters communicative was archetypal published astatine 0748 GMT, paring overmuch of its intraday declines. The offshore yuan besides gave backmost astir 120 pips of its losses.

The PBOC's absorption connected dependable yuan moves comes adjacent arsenic the worsening U.S. commercialized warfare severely challenges the competitiveness of China's monolithic export sector, suggesting fiscal marketplace stableness remains the priority.

The PBOC did not instantly respond to a petition by Reuters for comment. All the sources spoke connected information of anonymity, arsenic they were not authorised to speech astir marketplace matters publicly.

U.S. President Donald Trump's "reciprocal" tariffs connected dozens of countries took effect connected Wednesday, including 104% duties connected Chinese goods, deepening his planetary commercialized war.

A weaker yuan would marque exports cheaper and alleviate immoderate unit connected China's commercialized and the broader economy, but a crisp depreciation could substance unwanted superior outflow unit and hazard fiscal stability, analysts person said.