(Bloomberg) — China is pushing back against mounting investor pessimism toward the world’s second-largest economy.

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The central bank stepped up support for China’s slumping currency on Tuesday by setting the daily reference rate far stronger than estimates. The move came a day after a prominent finance writer and two of his peers were suspended from a social media platform for spreading “negative and harmful information” about the nation’s faltering stock market.

The government’s reluctance to add meaningful stimulus at a time when the economic outlook is darkening has spurred outflows from the stock market, helping push the yuan to a seven-month low. MSCI Inc’s gauge of Chinese equities is almost 20% below this year’s high in January.

While some investors may welcome the attempts to stem losses, the impact of government meddling in markets is often short-lived and can sometimes backfire. Restrictions on financial commentary risk stoking concern among foreign investors about access to independent information on Chinese companies and the economy.

The fixing is a “strong signal” that the People’s Bank of China views the recent moves as excessive, said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. in Singapore. Still, any intervention is only likely to slow the pace of depreciation, he said, adding that 7.25 per dollar is likely just the first line in the sand.

The yuan traded up 0.45% at 7.21 against the greenback at 2:32 p.m. local time, after tumbling 1% on Monday. The Chinese currency has slumped almost 5% this quarter, making it one of the worst performers among 31 major peers.

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The PBOC has a history of pulling on the currency’s levers in both directions in a “managed float” system when bets become one-sided. The so-called fixing — long seen as a policy signal on the Chinese exchange rate — was set 111 pips stronger than the average estimate in a Bloomberg survey — the largest premium since November.

The PBOC has other tools at its disposal to stem losses in the currency, such as cutting the reserve requirement ratio for foreign-currency deposits and increasing the cost for traders looking to short the yuan. State-owned banks were seen selling dollars on Monday and after the open on Tuesday.

Pressure on the yuan will gradually ease as the economy improves due to pro-growth measures, state-owned newspaper China Securities Journal said in a report Tuesday. It will then revert to a normal state of two-way moves, it said.

Doubts that the government will unveil strong enough stimulus is undermining the stock market. The MSCI China Index plunged more than 7% in a six-day rout before rebounding 2% on Tuesday.

On Monday, Sina Corp.’s Weibo released a statement banning Wu Xiaobo and two other writers who weren’t fully named. They had “attacked and undermined” Chinese policy and hurt the development of the stock market, according to a statement.

Wu has 4.7 million followers on the Twitter-like social media platform, making him one of China’s most influential writers about finance. His recent posts have been deleted, making it unclear what triggered the ban.

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China is grappling with weak economic growth and surging youth unemployment. The jobless rate among those aged between 16 and 24 reached 20.8% in May. That’s weighing on consumer confidence already battered by years of Covid Zero policies.

Domestic travel spending during the recent holiday for the dragon-boat festival was lower than pre-pandemic levels, according to official data released this weekend. Home sales figures are below the level in previous years, while estimates for June car sales showed a drop from a year ago.

Other outspoken commentators have been suspended from social media before. Well-known economist Ren Zeping was banned from Weibo in January last year after posting comments calling on the central bank to print money to pay for subsidies to encourage births.

In mid-2022, the public social media accounts of analyst Hong Hao were suspended for unspecified violations following bearish reports on the country. Shortly after, the China strategist left Bocom International Holdings, where he had worked for a decade.

In 2021, China waged a two-month campaign to crack down on commercial platforms and social media accounts that posted finance-related information deemed harmful to the economy.

–With assistance from Ran Li, April Ma, Amanda Wang, Li Liu and James Mayger.

(Adds context in fourth paragraph.)

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