Citing two sources with direct knowledge of the matter, Reuters reported that the People’s Bank of China (PBOC) called on some domestic banks to reduce their outward investments through the Bond Connect scheme.

The sources said that the PBOC guidance appears aimed at outflows and limiting Yuan offshore supply.

One of the sources said, "restricting Yuan from flowing to offshore market could tighten offshore yuan liquidity to raise the financing cost.”

Market reaction

At the time of writing, USD/CNY is trading 0.06% higher on the day at 7.2819.