Chinese exporters look to intricate workaround to retain dollar earnings

<p>In trying to retain their dollar earnings as the yuan stumbles, Chinese exporters are resorting to using currency swaps to manage that. According to China's FX regulator, domestic firms swapped a record $31.5 billion for yuan with banks in the onshore forward market in July.</p><p>This allows the exporters to place their dollars with the banks and get yuan instead, but through a forward/swap contract that will eventually reverse said flows and receive dollars again. It's a neat little workaround and one that is quite commonplace I would say for larger firms and corporate clients of banks.</p><p>I doubt Beijing will have the appetite to hunt down these names and force them to convert their dollars but they are trying to offset things on their own already as <a href="https://www.forexlive.com/news/chinas-major-state-owned-banks-reportedly-seen-selling-dollars-in-onshore-spot-fx-market-20230831/" target="_blank" rel="follow">seen</a> here earlier.</p>

This article was written by Justin Low at www.forexlive.com.