US: Treasury report failed to name China as a currency manipulator - TDS

Analysts at TDS note that overnight, the US Treasury released its report on FX policies of major trading partners, and as expected, failed to name China or any other country as a currency manipulator.

Key Quotes

“As before though, it maintained a “monitoring list” including China, Germany, Japan, Korea, and Switzerland, while Taiwan was removed from the list. There were some interesting comments on China though. The Treasury removed the focus on persistent, large-scale, and one-way foreign exchange intervention. Instead it led with criticism of the large, persistent bilateral trade surplus and policies that limit market access for imported goods and services as well as the investment regime for foreigners.”

“The UST actually acknowledged that China's intervention in the FX market (via fixing) and capital controls had "likely prevented a disorderly currency depreciation that would have negative consequences for the US, China, and global economy".  This is a crucial statement as it suggests the US is supportive of the current Chinese policy stance vis-a-vis the renminbi and favours China keeping it stable to strong (or at least won't criticize it). The focus remains on trade and foreign access issues for the UST.”