(Bloomberg) — China’s foreign-exchange regulator is gauging the impact of a stronger yuan on exporters, according to people familiar with the matter, as the currency rebounds from an eight-month low against the dollar.
At least three regional branches of state-owned lenders were asked by the State Administration of Foreign Exchange to assess the situation their clients face in surveys, said the people who asked not to be identified discussing private matters. Questions included hedging costs, currency risks and the impact of a stronger yuan on orders and profit, they said.
While Chinese regulators periodically conduct surveys to assess the market situation, the questions came just weeks after the yuan reversed a monthslong downtrend. China has been relying on exports to pull itself out of an economic slowdown, and the SAFE questions may indicate caution over the yuan’s latest advance.
The SAFE didn’t reply to a fax request for comments from Bloomberg.
Previously, exporters had refrained from converting their dollar proceeds into the yuan, as they expected the latter to weaken further.
In the survey sent this week, authorities requested information on the amount of the firms’ dollar conversion into the yuan and the exchange-rate level at which they will settle proceeds, according to the people.
Last week’s survey asked about the impact of the yuan’s gain on profit and export orders, as well as the companies’ outlook on the currency, hedging costs, and the difficulties they face in hedging through derivatives, one of the people said.
Read: China Exports Unexpectedly Slow in Warning Sign for Economy (1)
The yuan has recouped a bulk of the year’s weakness, thanks to its gains in August driven by a revival of global risk appetite on Federal Reserve easing bets. Authorities may be worried about how well companies are prepared to respond to the latest bout of volatility, and a potential hit to growth if yuan strength extends.
The onshore yuan has risen more than 1% this month, buoyed by the dollar’s retreat and support by the People’s Bank of China via the daily reference rate. An unwinding of carry trades that used the yuan as a funding currency has also helped.
The moves track gains across the region. The Bloomberg Asian Dollar Index has gained 1.9% so far in August and reached a seven-month high this week.
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