The thinking here is to swap the yuan for dollars in the forwards market to manage the fall in the domestic currency itself. This is done via mopping up dollar liquidity from the swap market, thus reducing readiness of dollar sales against the yuan. This is part of the typical playbook by China to defend the currency but so far, the sources say that there are no signs of intervention in spot trades yet.

"State banks have started heavily trading buy/sell one-year tenor since Thursday", according to one of the sources.