SHANGHAI -- The Chinese central bank has barred a number of foreign-affiliated banks from certain cross-border yuan dealings until the end of March, it was learned Wednesday.
The People's Bank of China apparently deemed the transactions "speculative" -- meaning that they run afoul of a ban on yuan trading not based on actual demand, such as foreign trade. The affected banks are seen to have ties to other Asian countries and Europe, although no Japanese affiliates were involved in the clampdown.
Against the U.S. dollar, the offshore yuan is worth significantly less than the onshore yuan. Some banks seek to profit from this by purchasing the offshore yuan and selling its mainland counterpart.
But such transactions help moderate the spread between the onshore and offshore yuan, and the crackdown may widen the gap. The offshore currency's discount to the onshore yuan approached 2% at one point in Wednesday's trading.