Trump reverses views on Russia, China

Apr 17, 2017, 04:39

No major trading partner is manipulating its currency for an unfair trade advantage, according to the first foreign-currency report released by the US Treasury Department under US President Donald Trump on Friday.

The department, however, said that both China and Germany should do more to reduce their large trade surpluses with the US.

Taiwan, South Korea and Japan were told in the report to keep currency market interventions as limited as possible while moving toward more flexible and transparent exchange rate policies, reports said.

USA 100 dollar banknotes and Chinese 100 yuan banknotes are seen in this picture illustration in Beijing, China, January 21, 2016.

Because it had been more than two decades since any country had been named a currency manipulator, Congress in 2015 changed the law to require Treasury to put countries on a less onerous "monitoring" list.

Still, despite that reversal, the report said a decade of holding down the renminbi had imposed "significant and long-lasting hardship on American workers and companies" and left China with the largest trade surplus of any country against the United States - $347 billion past year.

Treasury hasn't branded any nation a currency manipulator - a highly charged assertion - since the Clinton administration labeled China as such in 1994.

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In an interview Wednesday, Trump had indicated that he was backing away from his campaign pledge because he felt China hadn't been manipulating its currency in recent months and because labeling it as such now could jeopardize Beijing's co-operation in confronting North Korea.

"When our trading partners engage in currency manipulation, they impose significant, and often long-lasting hardship on American workers and businesses", he said.

"China will need to demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift by letting the RMB (yuan) rise with market forces once appreciation pressures resume", the report said.

Harry Yen (顏輝煌), head of the local central bank's foreign exchange department, said that the bank has established an effective communication channel with the U.S. Treasury and will express its opinions about the department's concerns over the New Taiwan dollar and U.S. dollar exchange rate. The US trade deficit with China in 2016 was over $347 billion (327 billion euros). He publicly retreated from that position after meeting with Chinese President Xi Jinping in Florida last weekend.

"The United States can not and will not bear the burden of an global trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates", it said.

"The basic message is that Japan needs to expand its domestic demand and one can read this as them telling Japan to import more American goods", said Minami of the Norinchukin Research Institute.

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