HONG KONG: China’s yuan held steady against the dollar on Wednesday, as highly anticipated Sino-US trade talks conveyed optimism but few specifics, keeping investors cautious.
Top officials from Beijing and Washington said on Tuesday that they had agreed on a framework to put their trade truce back on track and remove China’s export restrictions on rare earths.
Investors offered a guarded welcome as cooling tensions between the world’s two largest economies were largely expected, while awaiting more details on a durable resolution to the trade war.
The yuan was little changed at 7.1872 by 0253 GMT.
The offshore yuan traded at 7.1873 yuan per dollar, up about 0.04%.
“This morning’s headline that China-US have reached a framework for implementing the Geneva agreement may be viewed as a positive, but we suspect that considerable optimism may already be in the price,” analysts at Singaporean bank DBS said in a note.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.1815 per dollar, its strongest since April 2.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
Yuan slips as investors wait on outcome of US-China trade talks
Based on Wednesday’s official guidance, the yuan is allowed to drop as far as 7.3251.
The fixing has stayed stable at around the key 7.2 level, which sends a signal that the PBOC wants to maintain stability amid external volatilities and the progress on trade talks, analysts at Citi said.
Elsewhere, the Hong Kong dollar dropped to a new two-year low of 7.8494 per US dollar, continuing to hover near the weak end of its trading band against the greenback.
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