US says China not a cur­rency ma­nip­u­la­tor

The Pak Banker - - Front Page -

NEW YORK

The US has de­cided not to de­clare China as hav­ing ma­nip­u­lated its cur­rency to gain an un­fair trade ad­van­tage. But the Trea­sury did say that China’s cur­rency, the yuan, re­mains “sig­nif­i­cantly un­der­val­ued” and urged China to make fur­ther progress.

In its semi-an­nual report, it said Bei­jing did not meet the cri­te­ria to be called a cur­rency ma­nip­u­la­tor, which could have sparked US trade sanc­tions.

Crit­ics of China say it keeps the yuan low to keep its ex­ports cheap. “The Chi­nese au­thor­i­ties have sub­stan­tially re­duced the level of of­fi­cial in­ter­ven­tion in ex­change mar­kets since the third quar­ter of 2011, and China has taken a se­ries of steps to lib­er­alise con­trols on cap­i­tal move­ments, as part of a broader plan to move to a more flex­i­ble ex­change rate regime,” the Trea­sury said.

But it noted there was more to do and that “fur­ther ap­pre­ci­a­tion” against the US dol­lar and other ma­jor cur­ren­cies was “war­ranted”.

The is­sue of whether China ma­nip­u­lates its cur­rency is an im­por­tant po­lit­i­cal is­sue and an on­go­ing source of ten­sion be­tween the world’s two big­gest economies.

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