US Treasury Again Clears China of Rigging Currency

US Treasury Again Clears China of Rigging Currency

The new report said America's trade deficit has continued to widen this year, partly reflecting stronger growth in the United States than many other nations, but also "persistent trade and investment barriers in many economies, along with sustained undervaluation of many currencies". Mnuchin said on Saturday that Chinese officials at the International Monetary Fund's annual meeting last week "emphasised to me that it is not in their interest to see the [yuan] continue to depreciate".

President Trump argues the growth in Chinese exports to the USA has destroyed American jobs and has ordered tariffs on more than US$ 250bn of Chinese exports to try to stem the US's growing deficit with China.

Treasury found that six major trading partners continue to warrant placement on the "monitoring list" of major trading partners that merit close attention to their currency practices: China, Germany, India, Japan, South Korea and Switzerland.

China's foreign ministry welcomed the report and said it reflected "common sense and the consensus of the global community". China could pursue more market-based economic reforms that would bolster confidence in the renminbi, it said. Zuo noted some other developing country currencies have declined by 20 percent or more in the same time.

Major currencies have shown limited reaction after the US government late on Wednesday refrained from naming China as a currency manipulator.

The decision by the United States comes in spite of the yuan's recent depreciation and the escalating trade war between the world's two biggest economies. That would raise borrowing costs at a time when communist leaders are trying to shore up cooling growth.

Most analysts expect the central bank to stop the yuan from crossing the politically sensitive line of seven to the dollar.

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The minutes from the Fed's September 25-26 meeting showed every Fed policymaker backed raising interest rates last month and also generally agreed borrowing costs were set to rise further, despite U.S. President Donald Trump's view that the tightenings have already gone too far.

WASHINGTON-The Trump administration has again decided not to brand China a currency manipulator. The increased foreign holdings come ahead of the anticipated inclusion of Chinese government and policy-bank bonds in global bond market indices from next April.

The report's conclusion that China does not manipulate the exchange rate is in line with common sense and the consensus of the worldwide community, spokesperson Lu Kang told a routine press briefing.

But some say the central bank, confident it can control any side effects, might allow the market to carry the yuan gradually lower.

President Donald Trump has also criticized China for weakening the yuan, which helps Chinese exporters and diminishes the impact of tariffs.

If an economy meets all three criteria, the U.S. will negotiate with its government and may impose retaliatory measures, while if only two are present, it is consigned to the exchange rate policy monitoring list. For instance, the PBOC can use its "counter-cyclical factor" in the calculation of the yuan reference rate to limit the pace and extent of the currency's fall.

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