Tags: Chinese | Yuan | Dollar | Manipulation

Chinese Yuan Rises Against Dollar, Complicating Manipulation Charge

Chinese Yuan Rises Against Dollar, Complicating Manipulation Charge
(DreamsTime)

By    |   Tuesday, 04 April 2017 10:34 AM

There has been a change in the foreign-exchange market tide that may prove to be a snafu in the United States’ argument that China is keeping its currency artificially low against the dollar. The yuan has recently been rising against the American currency, the Wall Street Journal reports.

“The gains have been small—the yuan is up 1% against the dollar so far this year—but began shortly before Donald Trump was inaugurated as president. The rise could complicate a central criticism that Mr. Trump has leveled against China: that it is manipulating its currency downward at the expense of the U.S. to help bolster exports and its economy,” the Journal reported.

“Since Mr. Trump took office, Chinese authorities have relied on capital controls and a broadly weakening dollar to keep the yuan in a narrow range against the U.S. currency,” the Journal explained.

The yuan fell 6.5 percent last year in its biggest annual loss against the dollar since 1994, knocked by pressure from sluggish economic growth and a broadly strong U.S. currency.

China's last one-off currency devaluation, a 2 percent move in August 2015, shocked global markets and was widely viewed by traders and economists as a failure.

Trump has frequently accused China of keeping its currency artificially low against the dollar to make Chinese exports cheaper, and "stealing" American manufacturing jobs.

While he resisted acting on a campaign promise to declare China a currency manipulator on his first day in office, tensions have persisted over how the Trump administration's China policy would evolve.

Trump and Chinese leader Xi Jinping are scheduled to meet Thursday.

Meanwhile, China has called on the U.S. to play its part in resolving trade frictions between the two countries. China also recently said Beijing isn't devaluing its currency to boost exports.

Trump set the tone for what could be a tense meeting at his Mar-a-Lago retreat by tweeting on Thursday that the U.S. could no longer tolerate massive trade deficits and job losses.

In Thursday's tweet, Trump said the highly anticipated meeting, which is also expected to cover differences over North Korea and China's strategic ambitions in the South China Sea, "will be a very difficult one."

Chinese Vice Foreign Minister Zheng Zeguang acknowledged there was a trade imbalance, but said this was mostly due to differences in their two economic structures and noted that China had a trade deficit in services.

"China does not deliberately seek a trade surplus. We also have no intention of carrying out competitive currency devaluation to stimulate exports. This is not our policy," Zheng told a briefing about the Xi-Trump meeting.

(Newsmax wires services the Associated Press, Bloomberg and Reuters contributed to this report).
 

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While the yuan is down against a large basket of currencies this year, it has gained versus the dollar, the Wall Street Journal reports.
Chinese, Yuan, Dollar, Manipulation
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2017-34-04
Tuesday, 04 April 2017 10:34 AM
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