Yuan climbs to four-year high as PBOC nudges it up before Trump - Xi talks

What moved the market

The offshore yuan strengthened to 6.6935 per dollar on Friday, a 0.2% lift and the firmest print since July 2022. That puts the currency on track for a seventh consecutive quarterly advance and cements it as Asia's top performer this year.

Beijing's central bank has been quietly guiding the move, lifting the daily reference rate for eight sessions in a row, the longest streak since 2023. Even so, officials have been publishing fixes that are weaker than the trading level, a clear tell they want a steady ascent, not a spike.

Why the timing matters

The rally lands just ahead of next week's meeting between Xi Jinping and US President Donald Trump, where trade will be hard to avoid. A firmer yuan could dial down some of the friction. Western officials have long argued that a cheap currency gives Chinese exports an edge and feeds the record trade surplus.

Earlier this month, Deputy Governor Lu Lei said the PBOC aims to maintain yuan stability through 2030, emphasizing that China does not need to, nor does it intend to, pursue competitive devaluation, while noting exports are increasingly insensitive to exchange-rate moves. That stance lines up with the measured approach in recent days.

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What experts are saying

Serena Zhou - who works as a senior economist with Mizuho Securities Asia Ltd. - said, "The renminbi is likely to receive further support from the Trump-Xi summit," She projects the offshore yuan will be around 6.70 per dollar by the end of September and has kept her year-end target at 6.65. Zhou also noted the outlook for yuan appreciation has become "increasingly self-reinforcing," even with weaker Chinese growth and mounting bets on Federal Reserve rate hikes, and said Beijing seems at ease with a measured firming as it advances broader international adoption.

"A stable to mildly appreciating yuan would fit with policymakers' preference to keep foreign exchange conditions orderly and avoid currency volatility becoming another issue around the talks," said Christopher Wong, strategist at Oversea-Chinese Banking Corp. Abbas Keshvani, who covers Asia macro strategy for RBC Capital Markets, said, "We expect CNH to outperform in Asia given its relatively low dependence on imported energy and strategic energy inventory," and added, "It also helps that the PBOC tends to marshal the currency stable through periods of volatility."

What this means for your portfolio

Behind the move are strong exports and robust conversion flows, and the strength is not only against the dollar. A Bloomberg measure that tracks the CFETS RMB Index - which measures the yuan versus 25 trading-partner currencies - climbed 1.1% for the week to 103.2 on Friday, its strongest level since 2022. The rally has held even as markets price more Fed hikes, lifting Treasury yields and the dollar, and widening the China - US yield gap to a record. For everyday investors, the backdrop right now is a carefully managed currency heading into next week's summit.

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