US Secretary of the Treasury Janet Yellen would decline to name China as a currency manipulator in her first semi-annual foreign-exchange report, people familiar with the matter said, a move that would allow the US to sidestep a clash with Beijing.
The report, which is not yet finalized, is due tomorrow, although it is unclear when the department would release it.
When former US president Donald Trump was in office, the US Department of the Treasury was accused of politicizing the report after it abruptly designated China a manipulator in the middle of 2019, outside its usual release schedule, only to lift the label five months later to win concessions in a trade deal.
The onshore yuan yesterday was steady at 6.5488 to the US dollar in Asian trading.
Yellen’s team has also discussed the possibility of reversing a 2019 Trump administration move to lower thresholds for determining whether an economy is manipulating its currency for a competitive advantage, the people said on condition of anonymity.
A rollback could lead to the agency to cut the number of nations that it scrutinizes by nearly half, they said.
US President Joe Biden’s administration is looking to hold Beijing accountable for what Washington says are unfair trade practices, along with other issues, such as human rights violations, while reviewing what to do with tariffs slapped on billions of dollars of Chinese goods by Trump.
Designation as a currency manipulator comes with no immediate penalties, but can rattle financial markets.
US law requires the administration to engage with the countries to address the perceived exchange-rate imbalance.
Penalties, including exclusion from US government contracts, could be applied after a year, unless the label was removed.
In the last report by then-US secretary of the treasury Steven Mnuchin, he labeled Switzerland a currency manipulator and placed India on the watch list.
Those nations have largely ignored the US and are continuing aggressive moves, as the report is no longer as effective as it once was.
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