China's yuan steady as investors anxiously await plenum communique
China's yuan held steady on Thursday.
SHANGHAI: China's yuan held steady on Thursday, despite renewed signs of escalating trade tensions between Beijing and Washington, as investors anxiously await the outcome of a key meeting that will chart the country's economic, political and social policy for the next five years.
The elite Central Committee of China's ruling Communist Party is holding the Fourth Plenum from Monday to Thursday.
A communique is expected to be published later in the session, though the full plan and its development targets won't be released until March 2026.
The communique will highlight key tasks for the next five years, which "traditionally include economic growth, structural reform, social governance, environmental sustainability, and improvements in people's livelihoods," analysts at Morgan Stanley said in a note.
"We anticipate that technological self-sufficiency, innovation, and national security will remain the policy focus, while gradual social welfare reform could get endorsement." As of 0332 GMT, the onshore yuan traded largely flat at 7.1237 per dollar, while its offshore counterpart was down 0.02 per cent in Asian trade at 7.1275.
Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate at 7.0918 per dollar, its strongest since Oct 15, 2024, and 287 pips firmer than a Reuters' estimate. The spot yuan is allowed to trade 2 per cent either side of the fixed midpoint each day.
Authorities usually keep China's financial markets stable during and around key political and economic events, currency traders said, though the flare-up in tensions between Beijing and Washington is fraying nerves.
The Trump administration is considering a plan to curb a dizzying array of software-powered exports to China, from laptops to jet engines, to retaliate against Beijing's latest round of rare earth export restrictions, according to a US official and three people briefed by US authorities.
"Our base case for the US-China tension is that trade truce may be extended beyond Nov 1," Maybank analysts said in a note. "Sentiment at this point is looking increasingly fragile."
Traders said they will quickly switch their attention to the upcoming trade talks between officials from China and the United States in Kuala Lumpur this week and a possible meeting between the leaders of the two countries in South Korea later this month.
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