SHANGHAI: China’s yuan slipped against the dollar on Wednesday, as the greenback’s broad strength in global markets offset the any benefit from Beijing’s latest fiscal measures to prop up the economy.

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1785 per dollar, 1 pip firmer than the previous fix of 7.1786.

The fix was 1,428 pips firmer than Reuters estimate.

Wednesday’s official guidance was set at the strongest level for the yuan since Oct. 13, with the daily fixes continuing to come in much firmer than market projections. Traders and analysts interpreted the strong bias as an official attempt to stem a rapid depreciation in the yuan.

In the spot market, the onshore yuan opened at 7.3046 per dollar and was changing hands at 7.3123 at midday, 28 pips weaker than the previous late session close.

The losses in the yuan were capped as China’s top parliament body approved a 1 trillion yuan sovereign bond issuance and passed a bill to allow local governments to frontload part of their 2024 bond quotas, traders said, noting pro-growth measures helped to underpin market sentiment.

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“It’s still not quite a fiscal ‘bazooka’, but the additional debt-funded spending by the central government is another measure to help maintain economic growth around 5% this year, and prevent it from slipping too much into 2024,” analysts at RBC Capital Markets said in a note.

“Beyond this, it is also a gradual assumption of a greater fiscal burden by the central government from local governments that are facing growing fiscal problems and corresponding spending constraints.”

By midday, the global dollar index fell to 106.161 from the previous close of 106.27.

The offshore yuan was trading at 7.3175 per dollar.