State banks sell dollars for yuan market sources
PBOC fixes onshore band firmer than expected
Yuan bounces, pulls stocks and Asian currencies along

SHANGHAIBEIJING, June 27 Reuters China set a strongerthanexpected trading band for its currency on Tuesday and state banks sold dollars against the yuan, market sources said, in the strongest sign yet the authorities are growing increasingly uncomfortable with its quickening slide.

The yuan has fallen about 4 on the dollar in two months as flagging consumer confidence and a soggy property market have sapped momentum from the postpandemic recovery. It bounced about 0.4 on Tuesday, its best gain in almost two weeks.

State banks were selling dollars to buy yuan in the offshore spot market, according to four people familiar with the trades, and it appeared as the currency neared the psychologically important 7.25 per dollar level, two of the people said.

The banks were also active late on Monday, according to two more traders, when they bid up the yuan sharply into the onshore close, which influences the central bank39;s official yuan midpoint fixing the next day.

On Tuesday, the People39;s Bank of China PBOC set the middle of the band even firmer than expected, deviating from forecasting models by the most since May.

Analysts said that together the moves showed official unease at the yuan39;s downward momentum and that they could slow but perhaps not halt a decline, given the dour economic outlook.

They are sending…