CHINA’S central bank has suspended at least three foreign banks from conducting some foreign exchange business until the end of March, three sources who had seen the suspension notices said yesterday.

    Included among the suspended services are liquidation of spot positions for clients and some other services related to cross-border, onshore and offshore businesses, the sources said.

    The sources said the notices sent to the affected foreign banks by the People’s Bank of China (PBOC) gave no reason for the suspension.

    The sources said the banks might have been targeted due to the large scale of their cross-border forex businesses.

    “This is part of the PBOC’s expedient means to stabilize the yuan’s exchange rate,” said an executive at a foreign bank.

    China has taken a slew of steps to keep the yuan stable since it devalued it in August.

    The latest move comes just three months since the PBOC ordered banks to closely scrutinize clients’ foreign exchange transactions to prevent illicit cross-border currency arbitrage, which takes advantage of the different exchange rates the yuan fetches in offshore and onshore markets.

    The spread has been growing since the August devaluation, which makes it increasingly difficult for the bank to manage its currency and stem an outflow of capital.

    The yuan has come under renewed pressure since late November amid speculation that China would permit more depreciation after the International Monetary Fund announced the yuan’s admission into the fund’s basket of reserve currencies. (SD-Agencies)