China's central bank set the official midpoint reference for the yuan at 6.9996 — stronger than 7 per dollar on Wednesday — two days after Washington labeled Beijing a currency manipulator.

The yuan has been weakening in recent months, especially as the trade war between the U.S. and China intensified. Last week, President Donald Trump unexpectedly announced fresh tariffs on Beijing that are set to take effect from Sept. 1.

A Reuters estimate had predicted that the People's Bank of China would fix the yuan at 6.9994 against the dollar on Wednesday. On Tuesday, the PBOC set the yuan fixing at 6.9683, which was the weakest reference point since May 20, 2008, according to Reuters.

The yuan's level against the dollar is important because a lower currency makes a country's exports cheaper on international markets.

The Trump administration objects to a lower yuan because it would give Chinese products a price advantage.

The important 7-yuan-per-dollar level is being closely watched by investors, especially after the Chinese currency breached that psychologically key point on Monday for the first time since the global financial crisis in 2008, according to Reuters.

China allows the yuan to trade within a narrow band of 2% from each day's midpoint.

"The timing of the move beyond 7.00 is clearly not a coincidence and may have a political dimension," S&P Global Ratings said in a report published Wednesday.

"While the timing may raise concerns that big currency policy changes are afoot, so far, we have not seen any evidence that the overall policy framework has changed," economists at S&P noted.

The implications for macroeconomic policies will be limited "so long as China avoids destabilizing capital outflow," S&P said.

On Wednesday, the onshore yuan was trading at 7.0457 per dollar, and the offshore yuan changed hands at 7.0802 against the greenback.