Global Market: Yuan climbs to strongest level since 2023 as Xi-Trump talks loom

China’s yuan climbed to a 3-1/2-year high against the dollar on Tuesday after the central bank set a stronger daily fixing for the 10th consecutive session, as investors awaited a meeting between Chinese President Xi Jinping and U.S. President Donald Trump later this week.

The People’s Bank of China set the yuan’s midpoint rate at 6.7459 per dollar before the market opened, its strongest level since February 3, 2023. The fixing was, however, 470 pips weaker than a Reuters estimate of 6.6989.

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The onshore yuan is allowed to trade within a 2% range on either side of the central bank’s daily midpoint.

In the spot market, the yuan strengthened to 6.6936 per dollar, its highest level since January 2023, before paring back some gains. It was last trading at 6.6969 per dollar as of 0302 GMT. The offshore yuan stood at 6.6965 per dollar.

The latest stronger fixing came as investors focused on the outlook for U.S.-China trade relations ahead of Xi’s state visit to the United States from September 23 to 25 at Trump’s invitation.

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According to Reuters, U.S. Treasury Secretary Scott Bessent has expressed optimism about the trade relationship between the two countries ahead of the meeting. The September 24 talks are expected to focus on whether the leaders will signal an extension of a trade truce agreed last year that helped avert a major disruption to the global economy.

Other sensitive issues, including Taiwan, could also feature in discussions.

The stronger yuan fixing also comes after senior U.S. and Chinese officials agreed to hold another meeting in Shenzhen, China, in about two months to discuss artificial intelligence risks and communication protocols for potential AI safety incidents.

The yuan has gained about 4.4% against the dollar so far this year, making it one of Asia’s better-performing currencies. Its strength has been supported in part by resilient Chinese exports and a weaker dollar environment.

The central bank’s continued stronger midpoint settings have attracted attention from currency investors. The 10-session run is the longest since late 2023 and signals a recent shift toward allowing a firmer yuan.

However, the interest-rate differential between China and the United States remains wide and is close to a record level, which could limit the pace of further yuan appreciation.

Analysts also expect currency markets to remain sensitive to developments from the upcoming Xi-Trump meeting, particularly any signals on tariffs, trade policy and the continuation of the existing truce.

The yuan’s recent gains have also provided support for other Asian currencies, although shifts in U.S. Treasury yields and expectations for Federal Reserve policy remain important drivers of regional foreign-exchange markets.

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