The renminbi rallied by the most in over two months on Thursday after US president Donald Trump said trade discussions with China were “moving along nicely”, comments that helped assuage concerns that Washington’s trade war with Beijing could spill over into the currency front as well.
The onshore exchange rate (CNY) for the renminbi extended its earlier gains to trade 0.8 per cent higher at Rmb6.9188 per dollar. That’s the biggest one-day rise since August 24 and takes the Chinese currency to its strongest level in over a week.
The offshore exchange rate for the renminbi (CNH), which is not bound by the onshore rate’s trading band, also firmed 0.8 per cent to Rmb6.9197 per dollar.
The advances come after Mr Trump said on Twitter that he had a “long and very good conversation with President Xi Jinping of China.”
“We talked about many subjects, with a heavy emphasis on trade,” he tweeted. “Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!”
The renminbi has had a rough October, with the currency touching a 10-year low this week and coming within a hair of breaching the psychologically important level of 7 per dollar as pressure from ongoing trade tension with the US and concerns over slowing domestic growth weighed on demand for the currency.
The pace of the renminbi’s decline has also prompted concerns in some quarters that China might be letting its currency weaken on purpose in order to counter the effect of trade tariffs imposed by US and fuelled fears of a foreign exchange war.
The onshore renminbi booked a loss of nearly 1.6 per cent against the dollar in October, bringing its fall for the first 10 months of the year to around 6.7 per cent.
The drop also mark the seventh straight month of decline for the currency — the longest losing streak since 1994, the year the official market and the more liberalised “swap” market were unified.
Additional reporting by Adam Samson in London