Chinese traders are pulling back from the dollar, helping ease a shortage that has rattled the banking system and setting the yuan up for further gains.
The dollar’s premium over the yuan, as reflected in 12-month swap points, has narrowed by 25% since the end of December. Chinese state-owned banks have gradually shifted from wanting dollars to reducing their demand for it, to offering it out, according to traders who declined to be identified as they’re not authorized to speak publicly.