Offshore Yuan Rebounds

The offshore yuan rose to around 6.71 per dollar on Monday, rebounding from the previous session as investors assessed the latest developments following the recently concluded Trump-Xi summit. The United States and China unveiled a plan to reduce tariffs on roughly $30 billion worth of imports from each country while also agreeing to extend their trade truce through January. However, the summit fell short of delivering significant breakthroughs on key issues, including artificial intelligence cooperation and the Iran conflict. In addition, Beijing's efforts to persuade Washington to scale back arms sales to Taiwan appeared to make little progress, highlighting the persistent challenges in bilateral relations. Domestically, China's industrial profits rose 15.7% year-on-year to CNY 5.27 trillion in the first eight months of 2026, easing from a 17.6% increase in the January–July period.

The offshore yuan depreciated to around 6.72 per dollar on Friday, marking its fourth straight session of losses as traders weighed developments from the Trump-Xi summit in Washington. Artificial intelligence was a key topic during Thursday’s White House meeting, with both leaders discussing how to manage competition in the rapidly evolving sector. Ahead of the talks, Trump reiterated his opposition to stricter AI guardrails, while Xi said both countries have the “capability and responsibility” to ensure the technology remains under human control. Separately, Xi urged the US to explicitly oppose Taiwan independence, marking his first public appeal for Trump to reconsider Washington’s longstanding stance on the self-governed island. The White House has yet to release an official readout of the meeting, leaving Trump's response unclear. Externally, the yuan remained under pressure from a firmer US dollar as markets priced in around a 67% chance of a Federal Reserve rate hike in October.

The offshore yuan weakened past 6.71 per dollar on Thursday, hitting its lowest level in nearly three weeks, as a firm US dollar and uncertainty over the extension of the US-China trade truce weighed on the currency. The greenback remained supported by rising expectations for further policy tightening, with markets now pricing in around a 70% chance of a Fed rate hike in October, up from 55% a day earlier. Adding to pressure on the yuan, Treasury Secretary Scott Bessent said the US and China had agreed to extend their trade truce by two months, through January 10. However, China has yet to publicly confirm the expiration date, while the extension falls short of the three-to-six-month continuation previously suggested by some US officials. While expectations for the Trump-Xi summit remain subdued, the talks are expected to focus on artificial intelligence, Iran, Taiwan and broader economic ties, as both sides seek to preserve stability in bilateral relations.