SHANGHAI: China’s yuan briefly touched a fresh two-week high against a weaker dollar on Thursday before giving back all the intraday gains, dragged lower by a softer-than-expected official midpoint fixing and heightened worries over an economic slowdown.

The Chinese port city of Tianjin reported more COVID-19 infections on Thursday as it stepped up efforts to rein in an outbreak that has spread the highly transmissible Omicron variant to another Chinese city.

Omicron has brought fresh challenges to China’s strategy to quickly extinguish local outbreaks, and there are concerns that tough measures taken could end up hampering the economy.

Prior to market opening, the People’s Bank of China (PBOC) lifted the midpoint rate to a more than one-month high of 6.3542 per dollar, 116 pips, or 0.18%, stronger than the previous fix of 6.3658. It was the firmest since Dec. 9, 2021.

However, it was weaker than market projections, and 77 pips softer than Reuters’ estimate of 6.3465.

In the spot market, the onshore yuan opened at 6.3580 per dollar, rose to a two-week high of 6.3566, before changing hands at 6.3618 by midday, 30 pips weaker than the previous late session close.

The weaker-than-expected official midpoint guidance prevented the market from testing new highs in the yuan, traders said, as some investors suspected the authorities were signalling reluctance to see one-way bets on the yuan becoming too strong.