US Secretary of the Treasury Steven Mnuchin yesterday said Chinese officials told him this week that a further depreciation of China’s currency was not in the country’s interest.
Mnuchin also told a news conference that he was “not losing any sleep” over the prospect that China could sell US Treasury debt amid rising trade tension between the world’s two largest economies.
“We had productive conversations and they emphasized to me that it is not in their interest to see the RMB [yuan] to continue to depreciate,” Mnuchin said at the IMF and World Bank annual meetings on Bali.
“As I’ve said, the currency issue is an important issue for us in trade and will be part of our trade discussions,” Mnuchin added. “We want to make sure that depreciation is not being used for competitive purposes in trade.”
The comments come after Mnuchin expressed concern about a weakening of the yuan against the US dollar to near levels not seen in a decade, as the US Department of Treasury prepares to release a much-anticipated report next week on currency manipulation.
Mnuchin said that no decision had been made on whether US President Donald Trump would meet Chinese President Xi Jinping (習近平) at the G20 Leaders’ Summit in Argentina at the end of next month.
No formal talks to try to resolve the US-China trade dispute have taken place since Aug. 23.
“To the extent that we can make progress toward a meeting, I would encourage that, and that’s something that we’re having discussions about,” Mnuchin said. “For the moment, there are no preconditions. The president will decide on that.”
Mnuchin said he was not concerned that China’s holdings of US$1.17 trillion could be sold amid trade tension.
“The Treasury market is very liquid. This has never come up in any of our discussions whatsoever. I hope they think it’s good to hold US assets and US dollars and US Treasuries,” he said.
Mnuchin also reiterated his support for an independent US Federal Reserve, despite Trump’s persistent criticism of Fed rate increases.
He said he would not comment on Fed policy, but added that it was Trump’s “prerogative” to express his views on US interest rates.
“The president has made clear that he’d like lower rates, as opposed to higher rates, and that he’s concerned that if the Fed raises rates too quickly, that could have an impact on our growth,” Mnuchin said, adding that he saw no inconsistencies between his views and those of Trump.
Despite Trump’s attacks on the central bank, economists say that, with unemployment at its lowest level in 48 years and monthly job creation holding steady, the Fed is likely to stick to its course of rate hikes, with a fourth increase expected in December, and three or four next year.
The US economy remains strong and this week’s decline in the stock market was “just a natural correction,” Mnuchin added on Friday.
After two days of sharp drops in US and global stock markets over fears of rising interest rates and the US trade conflicts, Mnuchin said in an interview on CNBC that markets tended to go “too far in both directions” and then would have to correct.
Additional reporting by AFP
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