Reuters reported that the yuan's slump has caused a scramble by Chinese companies to hedge against the risk of further depreciation, which analysts say could add downward pressure on the currency.
The yuan's 4% decline in April, its steepest monthly drop since foreign exchange reforms of 1994, is due to portfolio outflows, a rising U.S. dollar and a gloomy outlook at home.
Corporate hedging was another risk for the currency as it touched a fresh 18 month low on Friday and jitters swept global markets.
The expectation of further renminbi depreciation has pushed more businesses to hedge against the risk, said Wang Dan, chief economist of Hang Seng Bank China, who called the yuan by its official name.
She said that by locking into a forward contract, demand for dollars rises immediately in the market and imposes downward pressure on the renminbi.
The yuan's currency is being traded to yuan, with some converting dollar revenue to yuan in recent weeks, while others are holding out and betting that they can get a better price if the yuan keeps falling.
The heaviest month of trading since late 2017 was when the dollar forward transactions nearly doubled from a year earlier to 100 billion yuan $15 billion in April.
Non-deliverable forwards are priced for a steady decline in the yuan over the next year, and sentiment suggests businesses are concerned about the global backdrop and are buying dollars, even though the data doesn't show the direction of the bets.
Han Changming, the managing director of a car importer in southern Fujian province, said he uses forward contracts to hedge the risk that the yuan will depreciate further.
The trend of yuan depreciation is clear, he said, since the United States has been raising interest rates, while China has been easing monetary policies.
Other hedging tools saw a spike in activity, with yuan futures turnover in Hong Kong hitting a new all time high on April 25 as the yuan slumped in spot trade.
Domestic financial institutions have not made clear forecasts on the yuan's outlook, and China's forex regulator has been stepping up efforts to persuade companies to hedge currency risks using a market neutral mentality.
The banks have continued to advise customers about the currency's likely decline or warn that it will remain volatile, even though positions are hardly neutral, according to client memos seen by Reuters.
Bank of Communications is stepping up its efforts to help companies manage currency risks.
The Chinese miner Chongyi Zhangyuan Tungsten Co was advised by the lender to lock in forward contracts for a $7.5 million cross-border loan, buying dollars to guard against a possible fall in the yuan.
There are some exporters selling dollars at spot prices to convert profits to yuan at favourable levels, and some bankers reported increased dollar selling in the forward market.
In the absence of official pushback and authorities the yuan's trading band has been allowed to move lower - analysts think corporate behaviour may exacerbate the downward momentum.
UBS chief China economist Wang Tao said that hedge positions were light until about two weeks ago, and that many exporters may have been caught off guard by the latest move.
As more market participants hedge the risk of further CNY depreciation, this could add to the momentum of the CNY depreciation.