FX.co ★ Offshore Yuan Firms After Trade Truce Extended

The offshore yuan experienced a slight appreciation, reaching approximately 7.19 against the US dollar on Tuesday, following two consecutive sessions of decline. This shift came after an agreement between the US and China to extend their tariff truce by 90 days. The agreement, endorsed by President Trump on Monday, postpones significant tariff increases until mid-November, maintaining US tariffs on Chinese imports at 30% and Chinese tariffs on American imports at 10%. This agreement prevents a drastic escalation to 145% and 125%, respectively, which would have almost amounted to a trade embargo. This extension provides relief to exporters and retailers, especially before the holiday season, and maintains lower tariffs on essential imports. Investor sentiment was further boosted by the announcement that Nvidia and AMD have consented to forfeit 15% of their Chinese chip revenue to the US government in exchange for regained access to the Chinese market. Simultaneously, Chinese exporters set a new record by selling $132.5 billion in dollar-yuan options during the first half of 2025, reflecting robust hedging activity that contributed to currency stability. Market traders are now focusing on the forthcoming US Consumer Price Index data, which could strengthen expectations of a more cautious approach by the Federal Reserve.