SHANGHAI/BEIJING (Reuters)

Major state-owned banks were active buyers of dollars in China’s onshore foreign exchange market on Friday to counter a rising yuan, as reported by four informed sources.

The banks intervened as the yuan reached a remarkable eight-month high of 7.0895 per dollar, surpassing chart resistance levels of 7.1 and completely recovering year-to-date losses. The sources, who wished to remain anonymous, are not authorized to discuss these market activities publicly.

Typically, China’s state banks act on behalf of the central bank in the foreign exchange market, but they may also conduct trades for their own account.

Last week, Reuters indicated that Chinese authorities have been quietly working to prevent the currency from experiencing drastic spikes, which could destabilize domestic financial markets and negatively affect exporters.

Investors are also closely monitoring whether significant gains in the yuan will encourage exporters to convert around $500 billion in accumulated receipts into yuan.

As of 0625 GMT, the yuan was trading at 7.0936 per dollar.