Good Articles to Share
US designates China as currency manipulator
The US has labeled China a currency manipulator, in a move that brings already tense relations between the two countries to a boil.
On Monday, the US treasury secretary, Steven Mnuchin, accused China of manipulating its currency “to gain unfair competitive advantage in international trade”. The US will now ask the International Monetary Fund to “eliminate the unfair competitive advantage created by China’s latest actions”.
It is the first such move since 1994 and came as international stock markets fell on fears of an escalation in the simmering conflict between the two trading superpowers. The Dow Jones index lost close to 3% on Monday following similar falls in Asia and Europe.
The move fulfills Donald Trump’s election campaign promise to label China a currency manipulator. “China is intent on continuing to receive the hundreds of Billions of Dollars they have been taking from the US with unfair trade practices and currency manipulation. So one-sided, it should have been stopped many years ago!” he wrote on Twitter.
The US action comes after China allowed its yuan to weaken past the key seven-per-dollar level on Monday for the first time in more than a decade.
China’s central bank said the depreciation was “due to the effects of unilateralist and trade-protectionist measures and the expectations for tariffs against China”.
Beijing later said it would stop buying US agricultural products and “will not rule out import tariffs on newly purchased US agricultural products”.
The announcement will inflame a year-long trade war with the US. Trump has already attacked Beijing for reneging on what he claims was a promise to buy more agricultural goods from the US, a claim Chinese authorities dispute.
The sharp 1.4% drop in the yuan comes days after Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300bn of Chinese imports from 1 September, abruptly breaking a brief ceasefire in a bruising trade war that has disrupted global supply chains and slowed growth.
The news knocked the dollar sharply lower and bolstered the price of gold.
The treasury department said a statement from the People’s Bank of China (PBOC) on Monday made clear that Chinese authorities had ample control over the yuan exchange rate.
The PBOC said Monday it would “continue to ... take necessary and targeted measures against the positive feedback behavior that may occur in the foreign exchange market”.
“This is an open acknowledgement by the PBOC that it has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis,” the treasury statement said.
It said China’s actions violated its commitment to refrain from competitive devaluation as part of the Group of 20 industrialized countries. The treasury said it expected China to adhere to those commitments and not target China’s exchange rate for competitive purposes.
US law sets out three criteria for identifying manipulation among major trading partners: a material global current account surplus, a significant bilateral trade surplus with the United States, and persistent one-way intervention in foreign exchange markets.
After determining a country is a manipulator, the treasury is required to demand special talks aimed at correcting an undervalued currency, with penalties such as exclusion from US government procurement contracts.
The US treasury designated Taiwan and South Korea as currency manipulators in 1988, the year that Congress enacted the currency review law. China was last designated a currency manipulator under the Clinton administration in 1994.
In May, the treasury refrained from declaring China a currency manipulator based on new, tougher criteria measuring a country’s global current account surplus, along with persistent one-way intervention and a large bilateral trade surplus with the US.
In the report, however, the treasury kept China on an enhanced monitoring list due to a “misalignment and undervaluation of the RMB relative to the dollar”.
More articles on Good Articles to Share
Spotify slightly misses revenue prediction, falls short of user growth target
Created by Tan KW | Jul 23, 2024
Harris hits at Trump's criminal record in first campaign speech | REUTERS
Created by Tan KW | Jul 23, 2024
Discussions
Be the first to like this. Showing 3 of 3 comments
China with 4 times population over USA naturally should be the world 's largest self-sustained consumer. Over time, China should rely less on US consumers market. So, no need to keep so much toilet paper. export trade model should diminish over time....Let consumer model takes over
2019-08-06 10:23
If this is all US can do, market will recover.
But one thing for sure, US and China relationship is not good at this moment. Things may change anytime. Who knows!
Will they commit full blown Cold War? DT is a self-acclaimed smart negotiator. Probably not.
Last escalation HK Hang Seng dropped to 23k. See if this support level can break or not.
2019-08-06 10:36
Post a Comment
Featured Posts
Latest Videos
Apps
Top Articles
1
BFM Podcast
3
Koon Yew Yin's Blog
4
https://dividendguy67.blogspot.com
5
6
7
Threenitty
8
save malaysia!
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
MQ Trading Signals
Stock
Time
Signal
Duration
Stock
Time
Signal
Duration
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
chinaman
Why China hold trillion of toilet paper USD? Just throw them, defend CNY to push global confidence on RMB as new world reserves. Now, Trump quickly seize the chance saying China as currency manipulator. RMB must show strong leadership as new reserves. Don't chicken out with devaluation each time trade risk on temporary hiccups., affecting all regional currencies as well. Look at Russia. it has cut off all USD, use only EURO in trade....
2019-08-06 10:13