The US Treasury on Friday said that none of the US’ major trading partners is manipulating its currency to gain advantage for its exports, in contrast to US Republican presidential candidate Donald Trump’s threats to declare China a currency manipulator if he is elected.
In its 16th and final currency report under US President Barack Obama, the Treasury said it added Switzerland to a foreign exchange “monitoring list” of countries with high external surpluses or currency market interventions.
It also kept Taiwan, China, Japan, Germany and South Korea on the list, first launched in April.
However, it said none of the six nations met the standard for enhanced scrutiny under a new trade enforcement law passed last year.
The Treasury said that for the year ending in June, it has “concluded that no major trading partner of the United States met the standard of manipulating the rate of exchange between its currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.”
Trump in June said that if elected, he would immediately “instruct my Treasury secretary to label China a currency manipulator, which should have been done years ago.”
However, based on the criteria for its currency monitoring list, the Treasury said China’s performance actually improved since the April report.
China now meets only one of the three criteria, its US$356 billion bilateral goods trade surplus with the US.
China’s current account surplus fell below the threshold of 3 percent of GDP, and it has not been engaged in “persistent one-sided intervention,” despite two yuan devaluations.
In fact, the Treasury said China has spent more than US$570 billion worth of foreign exchange assets to keep the yuan from depreciating further in the year to August.
China could actually drop off the Treasury monitoring list next April if the current account surplus remains below the threshold and it is not found to be purchasing foreign exchange to halt a rise in the yuan.
The Treasury said Germany, Japan and South Korea remained on the monitoring list because of material current account surpluses and significant bilateral trade surpluses with the US.
It said South Korea had intervened in foreign exchange markets both ways, to prevent the won from depreciating and later to limit its rise against the US dollar.
Switzerland got on the list because of its trade growth with the US in the past year, a large current account surplus and consistent purchases by the Swiss National Bank of foreign assets since it abandoned last year what was effectively a euro peg.
The Treasury said Taiwan’s current account surplus was well above its threshold and it had purchased about US$1 billion per month during the 12 months through June to limit the New Taiwan dollar’s appreciation.
Taiwan’s central bank yesterday denied accusations from the US that it had intervened in foreign exchange rates. The bank reiterated its determination and obligation to stabilize the NT dollar.
Additional reporting by staff writer
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