The Chinese Yuan climbed to a three-year high against the Dollar on Thursday, while stock markets slipped as investors waited for the outcome of a summit between the leaders of the world’s two biggest economies.
At the start of the two-day talks, US President Donald Trump described Chinese President Xi Jinping as a great leader and a friend, as discussions began on maintaining their fragile trade truce and addressing the Iran conflict.
The Chinese Yuan, traded in both onshore and offshore markets, reached its strongest level against the Dollar in more than three years after the central bank raised its official guidance rate.
The People’s Bank of China (PBOC) set the Yuan’s midpoint rate at 6.8401 per Dollar, the strongest fixing since 24th March 2023. However, the official rate was still 513 pips weaker than Reuters’ estimate of 6.7888, marking the biggest gap between the fixing and market expectations since 2nd March.
Since November, the central bank has consistently set the Yuan’s daily midpoint weaker than market expectations, a strategy that traders believe is aimed at curbing excessive appreciation and preserving currency stability.
At the time of writing, the onshore Yuan stood at 6.7862 per Dollar, while the offshore Yuan was trading at 6.7852.
The Yuan has steadily strengthened this year, supported mainly by China’s strong export performance and sizeable trade surplus.
So far in 2026, the currency has risen around 3% against the Dollar and gained 2.15% against a basket of major trading-partner currencies.
Yet despite the Yuan’s advance, Chinese equities weakened, with the benchmark Shanghai Composite Index falling 1.02% at the time of writing, while the blue-chip CSI300 Index declined 1.3%.
Investors generally expect Trump and Xi to avoid escalating trade disputes during their discussions, with market attention instead shifting toward the rapidly expanding artificial intelligence sector.
Capital markets are becoming increasingly less responsive to developments in Sino-US trade negotiations, with investors turning their attention instead to the fast pace of technological innovation, Reuters reports. The course of the trade war has shown that neither China nor the United States can afford to engage in a major conflict.
China’s increasing economic resilience has also helped protect its markets from fluctuations tied to Sino-US relations.
The United States and China are expected to move gradually toward a managed trade framework for non-sensitive goods this week, with both sides potentially identifying around $30 billion worth of products that could see lower tariffs and continued trade without breaching national security boundaries.