The US & The RMB: From “Manipulated” to “Misaligned”

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The US Treasury Department is reported by Forbes to have “stopped short of labelling Beijing a currency manipulator, which could trigger sanctions under US law”. However, it did call for action as “a matter of international interest and responsibility, with critical implications for the smooth functioning of the world’s largest trading system and the adjustment of global imbalances”.

The manipulation charge seems to have been avoided on the basis that the Treasury “could not determine whether China was keeping the yuan undervalued in order to gain a trade advantage.”

This decision, whilst not unexpected, will not please some, especially certain Senators who are keen to find ways of attacking the “undervalued” RMB. A Reuters report says that a newly announced bill (from Finance Committee Chairman Max Baucus, Sen. Charles Grassley; Sen. Charles Schumer; and Sen. Lindsey Graham) does not mention China by name, but that it would allow for action in the WTO where a country (let’s say, for argument’s sake, China) has a “fundamentally misaligned” currency – especially where this is due to government action.

The debate on the RMB and the US trade deficit with China will continue in Washington, in the Strategic Economic Dialogue, and in the media. And China will continue with its gradualist approach.

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One Response to “The US & The RMB: From “Manipulated” to “Misaligned””

  1. Finance information » Blog Archive » The US & The RMB: From “Manipulated” to “Misaligned” Says:

    […] ot mention China by name, but that it would allow for action in […] Original post by Jeremy Gordon and a wordpress plugin by Elliott

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