Martes, 19 Febrero, 2019

Is this a new Donald Trump? Abrupt reversals may reflect experience

People walk past an electronic board showing stock prices outside a brokerage at a business district in Tokyo Trump jawboning drags dollar, Treasuries down, Asia stocks mixed
Manuel Armenta | 15 Abril, 2017, 19:16

Trump has said some U.S. trading partners, particularly China, manipulated their currency, but has since backed off that claim and acknowledged that China had not weakened the yuan to make its exports cheaper.

"Treasury finds that six major trading partners warrant being placed on the monitoring list for special attention: China, Germany, Japan, Korea, Switzerland and Taiwan", the report said.

"While China now meets only one of the three criteria for currency manipulation listed in the report, the text makes clear that China's large bilateral trade surplus with the USA is by itself enough to warrant careful scrutiny of China's trade and currency practices", Prasad said.

In order for a country to be labeled a currency manipulator by the US Treasury, the treasury determines three criteria: the size of the country's current trade surplus with the US; the size of the country's trade surplus with the rest of the world; and the number of times the country intervened in currency markets in recent months.

The Treasury said it "will be scrutinizing China's trade and currency policies very closely".

US President Donald Trump this week said in an interview that China has not been manipulating its currency, RMB (yuan), for months, a sharp reversal from his campaign promise. The semi-annual US Treasury currency report did, however, keep China on a currency "monitoring list" despite a lower global current account surplus, citing China's unusually large, bilateral trade surplus with the United States.

Foreign exchange experts told Reuters last week that a manipulator label was unlikely for Beijing.

Now, China needed to show that its lack of intervention in the currency markets "to resist appreciation" over the past three years was a "durable" policy by allowing the yuan to strengthen "once appreciation pressures resume", the Treasury said. China's $347 billion goods trade surplus with the USA was the largest of major trading partners previous year, according to the report.

On Friday, the Treasury Department issued its first report on the currency practices of America's trading partners.

Treasury is committed to aggressively and vigilantly monitoring and combating unfair currency practices, it added. The report is the government's formal channel to impose the manipulator designation, leading to a year of negotiations for a solution and penalties if the practice continues.

A strong dollar policy is strictly defended by US since mid-1990s, saying for a robust, attractive economy, dollar stood strong. Trump, in a Wall Street Journal interview, said China had not manipulated the yuan for months, while accusing nations that he didn't identify of devaluing their currencies and saying the U.S. dollar is getting too strong.