Rich ForeX traders are pushing to buy the US dollar back in a bid to stop the collapse of the Chinese yuan.
The move came after US stocks plunged and China’s stock market plummeted.
US stocks dropped 7 per cent on Thursday and fell 3 per cent the following day.
China’s stock markets slumped by 2 per cent.
“We’ve got to have some money to support the dollar and to prevent it falling further and that’s what we’re doing,” Andrew Reuben, an analyst at Credit Suisse, told CNBC.
Reevents said that Chinese officials and investors were worried about a sharp drop in the yuan and the impact it could have on the Chinese economy.
But he said there was no guarantee that China would continue to buy dollars and that there was plenty of room for the yuan to fall further.
Analysts say the Fed could increase its interest rate if the Chinese government fails to meet its fiscal consolidation targets.
Fed Chair Janet Yellen is due to meet in Washington on Tuesday to review the economy.