China’s central bank has lifted its official yuan midpoint for the second day in a row to the strongest rate in nearly four months to reflect gains in the spot price a day earlier.

The People’s Bank of China (PBOC) set the midpoint rate at 7.0207 per US dollar prior to the market open, 103 pips, or 0.15 per cent, firmer than the previous fix of 7.0310, and the strongest since March 17.

However, traders said the guidance rate came in weaker than their forecasts for a second straight session, with some interpreting it as a sign that the authorities might not want rapid gains in the local currency.

The yuan advanced further to a fresh 3-1/2-month peak and tested key resistance on Tuesday, although weaker-than-expected guidance by the central bank trimmed gains.

Wednesday’s fixing was also 21 pips weaker than Reuters’ estimate of 7.0186.