Officials from the State Administration of Foreign Exchange (SAFE) privately communicated a relaxation of the informal limits on transaction in China's interbank market to foreign exchange brokers on Wednesday last week due to the Fed's interest rate rise of 0.75 percentage points, the Financial Times reported, citing two people familiar with the matter.

The news also mentioned that the renminbi's sharp fall over the past week started after regulators told traders that they were relaxing the foreign exchange trading limits.

The report, citing one of the people said the move to relax was made because policymakers "believed it was the proper time to let the renminbi depreciate a bit".

Market reaction

The news should have favored the USD/CNH prices to regain upside momentum after two loss-making days. That said, the offshore Chinese yuan (CNH) pair prints 0.26% intraday gains around 7.1150 by the press time.

Also read: USD/CNH Price Analysis: Snaps two-day downtrend around 7.1300 after China PMIs