The dollar fell to a three-year low against its major trading partners following Treasury Secretary Steven Mnuchin's remarks. Speaking at the World Economic Forum in Davos on the eve of Trump's arrival at the Swiss resort, Mnuchin said the weaker dollar was positive for US trade.

The dollar index, a gauge that measures the unit's strength against six other major currencies, fell to 88.986 as of midday, the lowest since December 2014.

Prior to market opening on Thursday, the People's Bank of China (PBOC) lifted its official yuan midpoint to 6.3724 per dollar, the strongest since November 2015.

Thursday's midpoint was 192 pips, or 0.3 percent, firmer than Wednesday's fix of 6.3916 and was the strongest since Nov. 13, 2015.

In the spot market, the onshore yuan opened at 6.3666 per dollar and rose to a high of 6.3271 at one point in morning trade, the firmest since Nov. 2, 2015.

As of midday, the onshore spot yuan was changing hands at 6.3300 at midday, 290 pips stronger than the previous late session close and 0.67 percent firmer than the midpoint.

If the onshore spot yuan finished the late night session at the midday level, it would have gained 0.46 percent against the greenback on the day.

Its offshore counterpart also followed the strengthening trend on Thursday morning. The offshore yuan surged to a high of 6.3253 per dollar before trading at 6.3325 as of midday.

Traders said the strength in the yuan was mainly driven by continued dollar weakness, which was amplified on Thursday morning following Mnuchin's remarks of welcoming a weaker dollar.

However, the yuan's rapid rise has spurred debate in the market on whether the Chinese unit was getting too strong too quickly.

The Chinese yuan has gained 2.8 percent against the dollar so far this year, following a rise of about 6.8 percent in 2017. Before that, the yuan had suffered three years of depreciating pressure against the dollar.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 96.51, firmer than the previous day's 96.2.

Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.4525, 1.24 percent weaker than the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.