SHANGHAI, Sept 14 Reuters China39;s central bank has asked some of the country39;s biggest lenders to refrain from immediately squaring their foreign exchange positions in the market, and to run open positions for a while in order to alleviate downside pressure on the yuan, two sources with knowledge the matter said.

As part of this informal window guidance, banks have been asked not to square their positions in the interbank foreign exchange markets after any U.S. dollar sales to clients, until their spot foreign exchange position hits a certain level, the sources said.

Most banks are allowed to run a net short or long foreign currency position in spot dollaryuan markets, within defined limits.

The move would effectively mean some of the heavy dollar purchases by companies would be absorbed by banks and sit on their books for a while, thus partially reducing downward pressure on the sliding yuan.

The directive came from a meeting the People39;s Bank of China PBOC held with a few commercial banks earlier this week, the sources said. Banks were also told that companies requiring to purchase 50 million or more will need to seek the central bank39;s approval, Reuters reported.

China39;s yuan has lost more than 5 against the dollar so far this year to trade 7.2735 per dollar on Thursday, becoming one of Asia39;s worst performing currencies for 2023.

The People39;s Bank of China PBOC did not immediately respond to Reuters request for comment.

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