ICYMI - China's state banks were in the FX market on Tuesday afternoon, intervening to prop up the yuan:
- major state-owned banks buying yuan and selling US dollars (by swapping yuan for dollars in the onshore swap market, then selling the dollars in the spot market)
- after Moody's cut China's outlook to negative in the afternoon the intervention gathered pace
The state banks take such actions under instruction from the People's Bank of China in order to slow the yuan decline. While state banks do have reasons for trading thier own accounts and views, such obvious, co-ordinated action is under 'advice' from the PBOC.
It looks like they have more work to do: