The latest attempt by the People’s Bank of China to shore up its currency and its stock market may have another motive: to get the Trump administration off its back in the continuing trade-war saga. The yuan was modestly softer against the dollar on Monday after jumping 1% on Friday after the PBOC adjusted the mechanism used to set the yuan’s official value each day by reintroducing a so-called “countercyclical factor” to its model. One dollar last bought 6.8169 yuan USDCNY, -0.1570% versus 6.8097 yuan late Friday in New York, according to FactSet. The countercyclical factor is designed to keep the yuan from falling too quickly against the dollar, thus acting countercyclically to market forces. The Chinese currency is fixed to the U.S. dollar at a midpoint and can move within a defined range from that point. The Shanghai Composite SHCOMP, -0.10% while also supported by stronger U.S. markets late last week, jumped 1.9% to 2,780.90 on Monday, its strongest close since Aug. 9. A continuing trade spat between the U.S. and China has taken a toll on the latter’s stocks and currency. Year-to-date, the Shanghai Composite is down 16%, making it one of the worst-performing global markets, while the yuan has ceded close to 5% against the dollar in that time frame. The No. 1 priority for the Chinese central bank with regards its latest move is to stop capital outflows, which have a “feedback loop into economic productivity,” said Chris Weston, head of research at Pepperstone in emailed comments. “This is the third measure since early August and while it is partially aimed at supporting the economy through trade negotiations, it is the side effect of an exodus of capital that they are determined to disincentives. Of course, they can use their reserves as well, but at this stage the urge is to curb one-way speculation and keep capital in domestic markets,” he said.via