Trump administration says no US trading partners manipulate currency

Owen Stevens
April 17, 2017

The move was expected as Trump earlier this week had said that China was not a currency manipulator.

However, the report did caution that six major USA trading partners warrant being placed on the monitoring list for special attention: China, Germany, Japan, Korea, Switzerland and Taiwan.

The Treasury left the criteria for manipulation unchanged at having a trade surplus with the USA above $20 billion; having a current-account surplus amounting to more than 3 percent of gross domestic product; repeated currency depreciating by buying foreign assets equivalent to 2 percent of output over the year. The report kept China, Japan, South Korea, Taiwan, Germany and Switzerland on a watch list as they met some of the criteria.

The Korea International Trade Association welcomed the U.S. decision not to label South Korea a currency manipulator, calling it a "rational outcome".

Trump repeatedly pledged in his election campaign to name China as a currency manipulator on his first day in office - prompting fears of a trade war - but did not do so.

Trump said the Chinese "are not currency manipulators", in a Wednesday interview with the Wall Street Journal, stepping back from past accusations that the Chinese are the "grand champions at manipulation of currency".

Donald Trump ran for President pledging to narrow USA trade deficits. The Treasury notified Seoul that it was closely monitoring its currency intervention practices.

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Also, Seoul's financial authorities intervened on the foreign exchange market throughout 2016 in order to ease a sharp depreciation of the local currency, selling $6.6 billion over the on-year period.

"China will need to demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift by letting the RMB rise with market forces once appreciation pressures resume", it said. "When the President fails to label them a currency manipulator, he gives them a green light to steal our jobs and wealth time and time again", he said.

Trump tweeted: China has been taking out massive amounts of money & wealth from the USA in totally one-sided trade, but won't help with North Korea.

Trump's Treasury took the same route as the Obama administration did past year, putting Germany and China on watch for potential problems.

Despite initial media reports suggesting Xi may have offered access for US beef as a concession to stave off rising trade tensions, China's Premier Li Keqiang this week appeared to link progress on the issue to USA restrictions on imports of some Chinese poultry products for food safety reasons.

"One thing we noticed was the report touched on the previous history of (currency manipulation)".

Central bank Department of Foreign Exchange Director-General Harry Yen (顏輝煌) said that the bank had established an effective communication channel with the Treasury Department and would express its opinions about the department's concerns over the New Taiwan dollar exchange rate.

Other reports by VgToday

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