from Sputnik News:
The US Treasury Department designated China a “currency manipulator” on Monday after the yuan drastically dropped against the dollar amid an escalating trade war between Washington and Beijing.
In an annual review of China’s economic policies, released on Friday, the International Monetary Fund (IMF) stood by its asessment that the value of the yuan was “broadly in line” with economic fundamentals, thus questioning the Trump administration’s declaration that Beijing is manipulating its currency to gain “unfair competitive advantage in international trade”.
The IMF said in the document that China took steps to bolster the value of its currency after the renminbi tumbled between mid-June and early August 2018. In general, the Chinese currency “was broadly stable” last year, decreasing in value by 2.5 percent against a basket of foreign currencies.
James Daniel, the IMF’s mission chief for China, told reporters that the Fund’s staff concluded the renminbi’s value in 2018 was “broadly in line with medium-term fundamentals and desirable policies, i.e. not significantly over- or undervalued”.
The IMF analysis was made public on 9 August — just four days after the US Treasury Department labelled China a “currency manipulator” in a move which will likely intensify already existing tensions between Beijing and Washington.
It was also announced that US Treasury Secretary Steven Mnuchin would engage with the IMF to “eliminate the unfair competitive advantage created by China’s latest actions”.
U.S. Treasury Designates China as a Currency Manipulator: https://t.co/Ndu7vtF3wO
— Treasury Department (@USTreasury) August 5, 2019
The decision came shortly after the People’s Bank of China (PBoC) allowed the managed exchange rate to depreciate beyond 7 renminbi to the dollar for the first time in 11 years, causing financial markets to tumble.
The PBoC explained that the decline was triggered by “unilateralism and trade protectionism measures and the imposition of tariff increases on China”.
China dropped the price of their currency to an almost a historic low. It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!
— Donald J. Trump (@realDonaldTrump) August 5, 2019
US President Donald Trump, meanwhile, said that he would not devalue the dollar amid the ongoing trade war with Beijing even though he tweeted on 8 August that he was not “thrilled with our very strong dollar”.