China's yuan slipped slightly against the dollar on Wednesday morning as traders anxiously awaited the meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping later this week.
Trump, who has accused China of manipulating its currency to boost exports, warned in a tweet last week the meetings at his Mar-a-Lago resort on Thursday and Friday will be "very difficult."
"This is a highly important meeting. Any deal between the two leaders will have a big impact on yuan's value in the medium term," said a trader at a Chinese lender in Shanghai. "But at the same time, the outcome is highly unpredictable. So we're watching," said the trader, who said China's central bank will likely keep the yuan stable during the meeting.
The People's Bank of China set the midpoint rate at 6.8906 per dollar prior to market open, firmer than the previous fix 6.8993.
The spot market opened at 6.8872 per dollar and was changing hands at 6.8866 at midday, 31 pips away from the previous late session close.
The CFETS RMB Index, which reflects yuan's value against a basket of currencies ended March at 92.93, up slightly from 92.91 hit on March 24, the lowest level since the index was launched in late 2014.
"The yuan's depreciation pressure against both the U.S. dollar and the basket of currencies has been largely released," said the trader. Following a quarterly meeting of its monetary policy committee, the PBOC said on April 1 that China's economy remains "generally stable" but it is facing complexities that "cannot be underestimated," adding it would continue to keep the yuan exchange rate at a reasonable and stable level.