China regulators are reportedly tightening control over interbank currency trade
Reuters reports on the matter, citing two banking sources
It is being reported that Chinese authorities are looking to increase curbs on currency speculation by tightening control over the inner workings of the market. Among such measures are pressuring banks to trade less and in smaller ranges.
Adding that China’s FX regulator has urged market makers to narrow bid-ask spreads, with one source also saying that they were told to cut volumes in order to reduce the turnover of interbank trades.
The latter is a peculiar one as they serve to provide liquidity in some way or another but then again, China is rather focused on stepping up regulation in the market these days so this is not exactly out of character when viewing their latest actions.
They’ve already cracked down on rising commodity prices, cryptocurrency activities, and restricting property speculation so extending that to prevent speculative activities in the Chinese yuan is certainly fitting with the shift in mentality.