Yuan hits fresh multi-year peak as China’s central bank eases curb ahead of Trump-Xi summit

China's yuan reached a peak of 6.6950 against the US dollar on Monday, September 21, its strongest level since January 2023. The Chinese central bank loosened its curb on currency appreciation ahead of President Xi Jinping's meeting with US President Donald Trump. This move comes as the two sides prepare to discuss various issues, including artificial intelligence, trade relations, supply chains, and Middle East tensions, at their summit from September 23 to 25.

The People's Bank of China (PBOC) set the midpoint rate at 6.7487 per dollar, the strongest since February 3, 2023, although traders had estimated a higher level. The spot yuan is permitted to trade within a 2% range of the fixed midpoint each day. Analysts at Goldman Sachs noted that the stronger yuan provides greater room for the offshore spot to strengthen further.

They also suggested that the upcoming summit should help maintain a stable trading relationship between the two countries. While a stronger and relatively stable yuan could create a more constructive backdrop for US-China negotiations, investors should remain cautious about interpreting the PBOC's move as the beginning of a sustained yuan appreciation cycle.