In the spot market, the onshore yuan advanced to a high of at one point, the strongest level since January 2023, before changing hands at 6.6969 as of 0302 GMT.
CNY=CFXS
6.6936 per dollar
Its offshore counterpart CNH=D3 last fetched 6.6965 per dollar.
"The firmer fixing bias is notable given the broader USD/rates backdrop and reinforces the recent shift in fixing guidance towards allowing a somewhat firmer RMB," said Christopher Wong, FX strategist at OCBC Bank.
"This also comes ahead of the Trump-Xi meeting, where we see room for RMB to stay supported into the event."
China's yuan has gained about 4.4% against the dollar this year, making it one of Asia's best-performing currencies, supported by resilient exports.
With the yield gap between China and the United States hovering near a record high, some investors expect further yuan appreciation to be more gradual.
"Beyond the meeting, wide US-China yield differentials and soft domestic fundamentals should still limit the pace of RMB appreciation," OCBC's Wong said.
Yuan hits strongest level since early 2023
China's yuan climbed to a 3-1/2-year high against the dollar on Tuesday after the central bank set a firmer daily fixing for the 10th straight session, the longest streak since late 2023, while investors awaited a meeting between the leaders of the world's two largest economies later this week.
US Treasury Secretary Scott Bessent offered positive comments about the US-China trade relationship ahead of Chinese President Xi Jinping's state visit to the US from September 23 to 25 at the invitation of President Donald Trump.
While thorny issues like Taiwan may surface, the main focus of their September 24 meeting is whether the leaders will signal an extension to a trade truce struck last year that averted a major shock to the global economy.
PBOC sets strongest midpoint since February 2023
Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC at 6.7459 per dollar, its strongest since February 3, 2023, but 470 pips weaker than a Reuters estimate of 6.6989. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
"Ahead of an important Xi-Trump summit, the recent string of stronger fixes could be a show of goodwill and also serves as an anchor for regional currencies in a somewhat volatile environment," Maybank analysts said in a note.
"The recent dollar rebound also provides a window for the spot-fix gap to narrow."
FXY•
