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China has granted licenses to foreign banks including Citigroup and HSBC to sell forward currency contracts to Chinese clients, implementing a liberalizing policy announced last month, banks and media said Tuesday.

The country's forex watchdog gave the go-ahead to Citigroup Inc., the world's top financial services provider, and at least two other overseas lenders to offer domestic clients forwards on the yuan versus major global currencies.

HSBC Holdings Plc., the world's second-largest bank, said it had won approval to provide such services from 12 branches sprinkled across the country. Its unit Hang Seng Bank had also won permission, said Cecilia Ko, a Hong Kong-based spokeswoman for the lender.

“Since China’s revaluation in July, we see increasing needs for corporates and banks to hedge their yuan risk,” said Richard Yorke, HSBC’s China chief executive.

The yuan was revalued by 2.1 percent to 8.11 per U.S. dollar July 21, losing its peg to the dollar.

The central bank says it now manages the currency with reference to a basket of major currencies, although the yuan has moved very little against the U.S. dollar since the revaluation.

The licenses are part of a policy announced in August, under which more local and foreign banks are to be allowed to trade yuan forward contracts. The policy is part of a broader effort to encourage firms to hedge against what is expected to be an increasingly volatile exchange rate.

The approvals will not cover permission to trade on an infant forwards market launched in August. Rather, the banks would do business only with their clients.

Foreign banks have long operated on an offshore market for nondeliverable yuan forwards, in which settlement is always in U.S. dollars. The entry of foreign banks into the domestic market is expected to heighten competition for such local players as Bank of China.