FX.co ★ Offshore Yuan Rangebound

The offshore yuan slipped slightly to about 7.14 per dollar on Tuesday, maintaining a narrow trading range as investors assessed signs of easing tensions between the United States and China. US Treasury Secretary Scott Bessent announced on Monday that President Trump is still planning to meet with Chinese President Xi Jinping in South Korea later this month, as both nations work towards reducing tensions related to tariffs and export controls. However, there is ongoing uncertainty in the market about the potential for both countries to finalize a long-term trade agreement. Meanwhile, China’s commerce ministry justified its rare earth export restrictions, clarifying that the US had been informed in advance and stressing that the measures are intended to protect national security, rather than to serve as a ban. The People’s Bank of China (PBOC) also continued to bolster the yuan by providing stronger midpoint guidance, helping to mitigate the effects of the trade tensions. Looking ahead, investors' focus will be on China's forthcoming inflation report, which is anticipated to reveal a modest year-on-year decline with a slight monthly increase.