The Chinese yuan strengthened against the U.S. dollar on Friday, supported by a weaker dollar and improved market sentiment following a Sino-U.S. tariff truce, while traders closely monitored the People's Bank of China's (PBOC) daily fixing for signals on Beijing's currency policy. The dollar's decline mirrored falling U.S. Treasury yields after recent weak U.S. economic data reinforced expectations for more Federal Reserve rate cuts this year. Adding to positive yuan sentiment, several investment banks revised their China GDP forecasts upward for 2025 after the U.S. and China agreed to a 90-day tariff reduction deal, seen as easing trade war tensions. Analysts suggest the yuan may remain strong in the short term due to this optimism, but anticipate a return to two-way fluctuations as the initial sentiment fades. The PBOC set the yuan's midpoint rate firmer than expected, and its recent fixings closer to market estimates are viewed as an effort to moderate rapid yuan appreciation, potentially influenced by sharp moves in the Taiwan dollar.   

Most Asian currencies are in higher on Friday. The Japanese yen increased 0.30%. The Indonesian rupiah is up by 1.20%, while the Indian rupee is down at 0.28%. The Malaysian ringgit is up 0.26%, and the Philippine peso is up by 0.45%. The Australian dollar is up at 0.38%, the Singapore dollar is higher by 0.25%, and the South Korean won is up by 0.42%.