China kept on US currency manipulator watch list amid sharp fall in US dollar-yuan exchange rate

The Trump administration has kept China on its watch list of countries that may be deliberately devaluing their currencies

The US Department of the Treasury cited China’s high trade surplus with the US as the primary reason behind the designation

Reading Time:3 minutes

The Trump administration has kept China on its currency manipulator watch list. Photo: Bloomberg

Published: 6:01pm, 17 Dec 2020Updated: 9:29am, 19 Dec 2020

The US Department of the Treasury has kept China on its watch list for foreign-exchange manipulation in its final report before the Trump administration leaves office.

Inclusion on the list is a step short of being named a currency manipulator, a designation the US rescinded as part of the phase one trade agreement signed in January. China promised not to manipulate the yuan’s exchange rate for competitive advantage as part of the deal.

While the report covers the year to June, the sharp rise in the value of the yuan against the US dollar since May makes it hard to argue that China is unfairly influencing its currency.

However, US authorities cited China’s high trade surplus with the US this year as the primary reason for its inclusion.

“The recent rise in China’s trade surplus is likely to continue weighing on global imbalances,” the US Treasury said in the report released on Wednesday. “As the global economic recovery path stabilises, it is critical to adopt policies that allow for a narrowing of both surplus and deficit imbalances.”