The Chinese Yuan edged down on Friday following the central bank setting a marginally weaker-than-predicted midpoint rate.

The People's Bank of China (PBOC) set the midpoint rate at 6.3825 per Dollar before the market opened, weaker than the prior fix of 6.3803.

In the spot market, the Yuan opened at 6.3835 per Dollar, trading at 6.3860 by midday, 9 pips weaker from the previous late session close, Reuters reports.

The Yuan moved close to a six-year high against major rivals on Thursday as investors believe authorities will likely tolerate an increase in the currency in the near-term.

Although an official from the central bank said on Thursday that two-way fluctuations in the Yuan will become the norm, the official objective was to maintain the currency at a balanced level.

Earlier this week, the Yuan was bolstered following a meeting between U.S. President Joe Biden and Chinese leader Xi Jinping, which according to currency traders provided indications of improved relations and the opportunity for the partial removal of tariffs.

"Signs of more cordial U.S.-China relations are emerging," according to Maybank analysts.

"Besides cautious hopes for potential reciprocal reduction in tariffs, flush ... USD liquidity onshore from its (China's) robust balance of payments, carry advantage of the currency etc., could continue to anchor yuan sentiments,” they added.

China reported a trade surplus of $84.54 billion in October, the highest on record.

According to traders, this is likely to continue to boost the Yuan in the short-term.

Moreover, the Dollar moved down from a 16-month high on Thursday as traders evaluated whether the greenback’s recent rise had been excessive.

A broad Dollar index increased to 95.643 from the previous close of 95.562. The offshore Yuan was trading at 6.3861 per Dollar.