IMF chief Lagarde dismisses idea Beijing is manipulating the yuan as Washington turns up the heat

International Monetary Fund chief Christine Lagarde has dismissed the idea that China is manipulating its currency to gain a competitive advantage, giving verbal support to Beijing as Washington reiterates its concerns about the yuan’s exchange rate.

Lagarde’s remarks on Thursday came just a day after US Treasury Secretary Steven Mnuchin warned China not to engage in a competitive devaluation of its currency.

Mnuchin was quoted by the Financial Times on Wednesday as saying that the Treasury monitored currency issues “very carefully” and that the Chinese yuan, also known as renminbi, had fallen “significantly” during the year. He added that he wanted to discuss the currency with Beijing as part of trade talks.

Lagarde, however, said the yuan’s decline was just a reflection of a strong US dollar.

“If you compare the position of the renminbi relative to the US dollar, it has a lot to do with the strength of the dollar,” the IMF’s managing director said at a press conference during the IMF and World Bank Group annual meetings in Bali, Indonesia.

“If you compare [other currencies] to the renminbi, there is a bit of depreciation, but certainly not that much.”