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Some Chinese companies are holding on to dollar revenues from exports, while others are turning to foreign exchange hedging in anticipation of a fall in the value of the yuan, according to executives, bankers and data analysed by Reuters.
Several bankers in China told Reuters that clients are reluctant to convert export receipts, while exchange filings show more than 30 A-share listed companies have signed up to use currency derivatives for risk-hedging so far this year.
Central bank data also shows a shift, with dollar deposits at China’s commercial banks, which had declined over the past year, jumping by $34 billion in January to $887.8 billion.
The moves are at odds with bank forecasts for a rising yuan in 2023 and broader market expectations that the U.S. dollar will fall this year, and could contribute to yuan weakness.
Ms. Zhu, the owner of a Shanghai-based electronic components exporter, said she is setting aside dollars, betting that her management of some $7 million annual inflow of the U.S. currency will prove crucial to the profitability of her company.
“I may need to convert some dollars into yuan to make payments to domestic suppliers,” said Zhu, who prefers to go by her last name. “(But) it feels like I should keep some dollars on hand, as the yuan will depreciate further.”
Others anticipating a bumpy ride ahead for the Chinese currency include China Southern Airlines.
China’s largest carrier by fleet size said in a Feb. 28 stock exchange filing that it planned up to $4 billion worth of currency hedging in 2023 to “smooth out exchange gains and losses”, up from $850 million last year.
