United States Secretary of the Treasury Steve Mnuchin announced Monday that the US has designated China as a “currency manipulator.”
Via a release from the Treasury Department, Mnuchin asserted that Beijing and the People’s Bank of China (PBOC) had violated “China’s G20 commitments to refrain from competitive devaluation.”
Citing an August 5 statement from the PBOC, the release quotes Chinese authorities as claiming to have “accumulated rich experience and policy tools, and will continue to innovate and enrich the control toolbox, and take necessary and targeted measures against the positive feedback behavior that may occur in the foreign exchange market.”
The secretary asserted that this amounted to Beijing’s “open acknowledgment” of “extensive experience manipulating its currency and remains prepared to do so on an ongoing basis.”
Mnuchin plans to confer with the International Monetary Fund to “eliminate the unfair competitive advantage created by China’s latest actions.”
This is the first time China has been labeled a manipulator by the US Treasury since 1994.
“I think many people in the private sector may not conclude it is a currency manipulator. The key rule is it’s not intervening consistently or persistently to weaken the currency and therefore the private sector, like economists and strategists may not be convinced,” Bannockburn Chief Market Strategist Marc Chandler told CNBC following the US Treasury announcement. He also noted the move is “another step in the currency war.”
Monday afternoon the Dow Jones Industrial Adverage plummeted 767.27 points, hours after the yuan fell in price.
Furthermore, Beijing announced it would immediately halt further imports of US agriculture goods in response to US President Donald Trump’s recent threats to slap China with a 10% tariff on some $300 billion worth of goods.
Prior to Monday’s designation, the Trump administration had passed on five chances to label China a currency manipulator, according to CNBC.