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BEIJING, October 26 (TMTPOST)— The offshore yuan soared by the most on record following Chinese government’s new signal to boost the currency against U.S. dollar hit new low earlier this week.

Source: Visual China

The onshore yuan rose by 1.3% at 7.1707 per dollar at night trading session, ending Wednesday with the highest level in nearly two weeks. The offshore yuan last traded at 7.1875 at 04:59 a.m. Beijing Time Thursday after jumping a record daily gain of 1.8% to 7.1822, a strong midday level not seen since October 14.

In order to improve the cross-border source of funding for domestic businesses and financial institutions, the People’s Bank of China and the State Administration of Foreign Exchange decided to raise the macro-prudential adjustment parameter for companies and banks from 1 to 1.25, the central bank announced earlier Wednesday. The move suggests the parameter’s first raise since March 11, 2020 and the first adjustment since January 2021, when the parameter was cut from 1.25.

The upward revision of the parameter, as a multiplier that determines the upper limit of outstanding cross-border financing an institution can have, can encourage Chinese banks and companies raise more funds from overseas, thus further hold the yuan exchange steadier by increasing the US dollar supply in mainland China. The move was deemed as Beijing’s latest effort to alleviate the increasing depreciation pressure of yuan, which just hit a new 2008 low to 7.3749 Tuesday due to the strengthening U.S. dollar.

Besides the financial authorities’ move, yuan could also receive more support from banks. Major Chinese state-owned bank sold U.S. dollars in both onshore and offshore markets to shore up yuan, Reuters cited people familiar with the matter. During the intervention, the state banks was said to unusually execute sales in onshore market in early U.S. trading hours, since they are normally active in offshore market to affect the onshore yuan. A Bloomberg report also said traders found suspected state bank intervention. The intervention offers some near-term stabilization for the yuan after the rapid drop over the last few days, according to Stephen Chiu, chief Asia FX & Rates strategist at Bloomberg Intelligence.