Yuan hits fresh multi-year peak as PBOC eases curbs ahead of Trump-Xi summit
Investors should be cautious about interpreting the move as the beginning of a sustained appreciation cycle, OCBC said.
On September 21, China's renminbi (RMB) reached a multi-year high against the US dollar, strengthening to 6.6950 per dollar, the strongest level since January 16, 2023. This surge occurred ahead of the scheduled summit between US President Donald Trump and Chinese President Xi Jinping, which took place from September 23 to 25. The People's Bank of China (PBOC) had previously set the daily midpoint rate at 6.7487, but the RMB ended the day at 6.6955, weaker than the estimated 6.6946.
The PBOC's daily official guidance has been weaker than market expectations for nearly a year, but in September, it strengthened at a faster pace, reducing the gap between the midpoint and market expectations. Analysts from Goldman Sachs noted that the summit creates more room for the RMB to strengthen further. Despite the stronger RMB, broader currency markets remained relatively muted as investors considered the global interest-rate outlook following several rate hikes by major central banks.
While a stronger and stable RMB could foster a more positive environment for US-China negotiations, OCBC Bank advised caution, suggesting that part of the recent appreciation may be policy-managed stability around the summit rather than a fundamental re-rating of the RMB.
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