Yuan hits fresh 3-1/2-year peak as PBOC eases appreciation curb
China's yuan strengthened to its highest level in over three and a half years against the US dollar on Monday, reaching 6.6957 per dollar, as the central bank appeared to ease its efforts to curb appreciation ahead of a summit between Chinese and US leaders.
By Jiaxing Li HONG KONG, Sept 21 (Reuters) — China's yuan strengthened to more than a 3-1/2-year high against the US dollar on Monday as the central bank softened its curb on currency appreciation ahead of the meeting this week between the leaders of China and the US. US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng concluded talks in New York on Sunday, laying the groundwork for President Donald Trump and Chinese President Xi Jinping to consider at their summit on Thursday. The two sides are expected to discuss AI, trade relations, supply chains and Middle East tensions, among other issues, although analysts expect no major policy breakthrough.
6957 per dollar in early trade, the strongest level since January 16, 2023. 03% in Asian trade. 7487 per dollar, the strongest since Feb 3, 2023, but 536 pips weaker than a Reuters estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
For nearly a year, the central bank has set its daily official yuan guidance at levels weaker than market expectations, a move traders and analysts have interpreted as an attempt to slow the currency's appreciation. However, the official midpoint has strengthened at a faster pace this month, narrowing its gap with market expectations after it hit its widest level since February, suggesting the PBOC has eased its resistance to yuan gains. The fixing strength in the run-up to the Trump-Xi summit is in line with recent history, creating greater room for offshore spot to strengthen further, analysts at Goldman Sachs said in a note.
"The fact that the summit is occurring should help maintain a stable trading relationship... " Broader currency markets were largely muted as investors pondered the global interest-rate outlook after a wave of hikes from major central banks last week. 23 after gaining more than 1% last week following a hawkish hike from the Federal Reserve. A stronger and relatively stable yuan will help create a more constructive backdrop for US-China negotiations and reduce the scope for renewed accusations of competitive depreciation, but investors should be cautious about interpreting the PBOC move as the beginning of a sustained yuan appreciation cycle, OCBC said in a note.
50 pips vs. 4 % vs. 6 % Levels At 03:14 Gmt Gmt INSTRUMENT CURRENT UP/DOWN(-) % CHANGE DAY'S HIGH DAY'S vs USD VS. com; +852 34627725;)