The offshore Chinese yuan weakened toward 7.18 per dollar on Friday, extending its recent downtrend despite renewed dialogue between Washington and Beijing. Hopes that fresh US-China trade talks might buoy sentiment were short-lived as markets remained unconvinced about any meaningful breakthrough.

On Thursday, Presidents Donald Trump and Xi Jinping held a phone call and agreed to resume negotiations aimed at resolving the ongoing trade war. However, the absence of concrete progress or specific timelines left investors skeptical, particularly given the history of unresolved disputes and sudden policy reversals between the two economic giants.

Analysts cautioned that the latest gesture of goodwill may not translate into real progress. “Tensions remain high, and the path to resolution is still unclear,” said one strategist. As a result, traders continued to favor the US dollar over the yuan amid elevated risk and uncertainty.

Adding to the yuan’s woes, China’s composite PMI fell to a 2.5-year low in May, signaling the first contraction in private sector activity since December 2022. The weak PMI reading underscores persistent structural weaknesses in the economy and casts doubt over the effectiveness of recent stimulus measures.

Markets now turn their attention to a raft of upcoming economic data — including consumer price inflation, PPI, and trade figures — for signs of stabilization or further deterioration. With domestic demand still struggling and external headwinds mounting, the yuan may continue facing downside pressure in the near term.