SHANGHAI: China’s yuan held steady against the dollar on Friday, even as the central bank set its midpoint at a more than three-week low, with investors waiting on leads from a potentially crucial phone call between the leaders of the world’s two largest economies.
Trade relations between Washington and Beijing have long been one of the key factors influencing the yuan’s value and market sentiment over the past few years, and the call due later in the session could affect the outlook of the Chinese currency.
A framework agreement to switch short-video app TikTok to US-controlled ownership will be confirmed in the call between US President Donald Trump and Chinese President Xi Jinping, while talks about a trade truce is also expected on the agenda.
“Trump and Xi will hold a call tonight, which is expected to formalize an agreement on TikTok and signal a possible easing of trade tensions,” said Chang Wei Liang, FX & credit strategist at DBS.
As of 0404 GMT, the onshore yuan was 0.02 percent higher at 7.1117 per dollar, while its offshore counterpart was down about 0.01 percent in Asian trade to 7.1101.
Prior to the market’s opening, the People’s Bank of China (PBOC) set the midpoint rate at 7.1128 per dollar, its weakest since August 26 and 46 pips firmer than a Reuters’ estimate of 7.1174. The spot yuan is allowed to trade 2 percent either side of the fixed midpoint each day.
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