Daily Management Review

United States Remove Currency Manipulator Tag On China


01/16/2020




United States Remove Currency Manipulator Tag On China
Even as the two countries signed off a partial trade agreement, the United States removed China from its list of countries that allegedly manipulate their currencies. This was done by the US Treasury Department earlier this, days before the signing of the so called phase one trade deal between the US President Donald Trump and senior Chinese officials in Washington.
 
This decision by the US was described as "right choice" by Zou Zhiwu, deputy head of China's customs authority.
 
However the Chinese yuan continued to soar against the US dollar.  The yuan traded at around 6.874 per US dollar, its highest level in more than five months on the onshore market in Shanghai. The yuan also reached its strongest since last July in the offshore trading which allows free movement of the currency and where one dollar could buy 6.873 yuan.
 
Of late the value of the yuan against the US dollar had been climbing even as the days of the historic signing of the phase one trade deal between the two countries drew closer. Stephen Innes, chief Asia market strategist at AxiTrader, said that the decision of the US to remove China from its currency manipulator list was a "most precise and definitive" de-escalation of trade tensions till now.
 
"With the yuan strengthening ahead of the [phase one] deal signing, it's indicating the potential for further improvement in trade relations," he wrote.
 
In separate data it was revealed that there had been a fall of 1 per cent in China's global trade fell in 2019 to touch $4.6 trillion based on the measurement using the value in US dollars of the imports and exports of China. According to the data, there was an almost 15 per cent downslide in the overall trade of China with the United States.  
 
However reports quoting a senior customs official in China claimed that in November and December, there had been a rebound in Chinese imports from the United States, particularly in the import of soybeans, pork and cars.
 
Allying fears that the huge import commitments that China has made about US products after the signing of the phase one of the trade deal could jeopardize and marginalize China‚Äôs other exporting partners,   said that the move will not impact the trade relationship of China with its other trading partners.
 
There was mixed stock market reaction to the release of the latest trade data of China.
 
(Source:www.cnn.com)