Trump may Call China a Cur­rency Ma­nip­u­la­tor: Deutsche Bank

The Economic Times - - Finance & Commodities -

AlthoughUSPres­i­den­tDon­aldTrump did not la­bel China a “cur­rency ma­nip­u­la­tor” on his first day in office as he said he would, a team at Deutsche Bank is not rul­ing out the pos­si­bil­ity of him do­ing so go­ing for­ward. “Some time in the next cou­ple of weeks, we think it is likely that Pres­i­dent Trump will de­clare China a cur­rency ma­nip­u­la­tor and pro­pose penal­ties if it does not en­ter into ne­go­ti­a­tions to lower its trade sur­plus with the US,” the team led by Michael Spencer, chief econ­o­mist at Deutsche Bank, wrote in a note.

China has been try­ing to con­trol the rate of its cur­rency’s de­pre­ci­a­tion since 2014, and it has had a harder time keep­ing it sta­ble in trade-weighted terms since mid-2016. The Deutsche Bank team noted: “While this in­ter­ven­tion pol­icy can in­deed be de­scribed as ‘one-sided’ as pro­scribed by US law, it is in­ter­ven­tion in the di­rec­tion that would nor­mally be viewed as in the US’ in­ter­est –– to pre­vent even faster de­pre­ci­a­tion of the Chi­nese cur­rency.”

must have a sig­nif­i­cant bi­lat­eral trade sur­plus with the US. The coun­try has a ‘ma­te­rial’ cur­rency ac­count sur­plus. The coun­try is en­gaged in per­sis­tent one-sided in­ter­ven­tion in the for­eign ex­change mar­ket.

There are three cri­te­ria that must be met for a coun­try to be a cur­rency ma­nip­u­la­tor by the Trea­sury Depart­ment:

The coun­try

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