According to sources, the People's Bank of China has told major state-run banks to shed dollar holdings while snapping up offshore renminbi, which has continued to fall despite previous interventions.

According to the report, the scale of this latest effort will be large and will provide a floor to the Chinese currency.

The amount of dollars to be sold hasn't been decided, but it will mostly involve the state banks' currency reserves, according to a report. Their offshore branches, including those based in Hong Kong, New York and London, were ordered to review their offshore holdings to see if they have enough dollars.

The Chinese currency fell against the dollar on Thursday and is on track for its worst yearly decline since 1994. China's offshore yuan fell to a record-low against the US dollar this week, while its domestic unit fell to its lowest level since the financial crisis.

The Federal Reserve's policy path has strengthened the dollar to 20-year highs, putting pressure on other central banks and sparking a reverse currency war.

The recent decline of the Chinese currency below the psychological threshold of 7-per-dollar has raised concerns.

The People's Bank of China has a bias towards its currency reference rate. The cost of shorting the currency has gone up due to warnings from the central bank.

In an effort to spark growth in an economy that has been dragged down by COVID-19 lockdowns, a real estate crash, and supply chain troubles, it has not raised benchmark rates.