US Treasury Secretary Stephen Mnuchin. Reuters
Arabic and International
Economy News – Baghdad
US Treasury Secretary Stephen Mnuchin said in a statement that the US government has decided to consider China as a currency manipulator and will engage with the International Monetary Fund to eliminate unfair competition from Beijing.
The move exacerbates already tense relations between the two countries and is an implementation of US President Donald Trump’s pledge to classify China as a currency manipulator for the first time since 1994.
The US move comes after China allowed its yuan currency to fall below seven against the dollar on Monday for the first time in more than a decade. Beijing later said it would stop buying US farm produce, a major escalation in a nearly year-old trade war with the United States.
The sharp 1.4 percent fall of the yuan came days after Trump’s surprise decision on Thursday to impose 10 percent tariffs on $ 300 billion in imports from China, shocking financial markets after a brief truce in their trade war.
The news pushed the dollar sharply lower while supporting gold.
The US Treasury said a statement by the People’s Bank of China on Monday made it clear that Chinese authorities exercised extensive control over the yuan’s exchange rate.
The People’s Bank of China said it would “continue to take necessary and targeted measures against (herd behavior) that may occur in the foreign exchange market.”
“This is an explicit acknowledgment by the People’s Bank of China that he has extensive experience in currency manipulation and that he is still prepared to do so continuously,” the US Treasury said.
China had violated an obligation to refrain from devaluing for the purpose of influencing competition within the G20.
Once a country has been classified as a currency manipulator, the Treasury is obliged to call for private talks to correct undervalued currency, including sanctions.
The department classified Taiwan and South Korea as currency manipulators in 1988, the year Congress passed the Currency Review Act. China was the last country to be further classified in 1994.