SHANGHAIBEIJING, July 25 Reuters China39;s major stateowned banks were seen selling U.S. dollars to buy yuan in both onshore and offshore spot markets in early Asian trade on Tuesday, three people with direct knowledge of the matter said, moves aimed at supporting the Chinese currency.

China39;s state banks usually trade on behalf of the central bank in the country39;s foreign exchange market, but they could also trade on their own behalf.

The dollar sales come after China39;s top leaders pledged on Monday to step up policy support for the economy amid a tortuous postCOVID19 recovery, focusing on boosting domestic demand and signalling more stimulus steps.

Policymakers also said China will keep the yuan exchange rate basically stable at reasonable and balanced levels, and vowed to invigorate the capital market and restore investor confidence.

It is interesting that the Politburo mentioned FX stability in the statement, for the first time in recent years, analysts at HSBC said in a note.

This means that smoothing yuan depreciation pressure may become more of a policy priority from now on. This is in line with the People39;s Bank of China39;s PBOC further tightening of FX policy recently.

China39;s monetary authorities have ramped up efforts recently to defend a weakening currency. Last week, regulators relaxed rules to allow companies to borrow more overseas while the PBOC has been persistently setting daily midpoint guidance rate firmer than market projections….