Treasury Secretary Steven Mnuchin said on Thursday he’s in no rush to label China a currency manipulator, pouring cold water on speculation the Trump administration would pursue a more aggressive stance toward the world’s second largest economy.
“We have a process within Treasury where we go through and look at currency manipulation across the board and we’ll go through that process,” Mnuchin told CNBC on Thursday.
In a separate interview with Bloomberg, the Treasury Secretary confirmed there would be “no announcement” of any currency manipulation before his department concludes its next biannual report on exchange rates in April.
While campaigning, President Donald Trump vowed to confront China’s trade dominance by implementing tariffs on its U.S.-bound products. He also pledged to declare Beijing a currency manipulator on “Day 1” of his presidency.
The Chinese yuan has been at the center of global volatility over the past two years after regulators began aggressively devaluing the currency. This People’s Bank of China (PBOC) cut the yuan’s reference rate against the dollar by nearly 2% in August 2015, triggering the currency’s biggest one-day drop since 1994. Since then, the yuan’s value has continued to deteriorate, as China seeks to raise export competitiveness and boost the role of market pricing in the domestic economy.
Although the Republican administration appears to have softened its stance on China’s yuan intervention, there is growing bipartisan support in Congress to recognize Beijing as a currency manipulator. That was the key message Republican Senator Lindsey Graham delivered to a panel at the Munich Security Conference earlier this month.
“I don’t want a war with China; I want a better relationship. But what they’re doing needs to be pushed back against – and I think currency manipulation will be an issue that may unite Congress,” Graham said, as quoted by Bloomberg.
Graham’s position was firmly backed by New Hampshire Democrat Jeanne Shaheen.
The yuan has weakened 13% against the U.S. dollar over the past three years. Beijing guided its currency higher at the start of the year in an effort to curb gyrations in the global financial markets.
The U.S. dollar has been on a tear since the November 8 election, having reached nearly 13-year highs against a basket of other major currencies excluding the yuan. After a volatile start to the year, the dollar index has rebounded sharply in February, gaining ground on the euro and British pound.
The gains have been spurred on by expectations that Trump’s pro-growth policies would lead to faster inflation, which could prompt the Federal Reserve to raise interest rates at an accelerated pace.
The Fed’s latest policy minutes on Wednesday signaled that higher rates may be on the horizon very soon. The central bank’s next policy meeting is scheduled March 14-15.
 Gregg Robb (February 23, 2017). “Mnuchin in no rush to label China a currency manipulator.” Market Watch.
 Bloomberg News (August 10, 2015). “China Rattles Markets With Yuan Devaluation.”
 Patrick Donahue (February 19, 2017). “Trump Seen Having Support Of He Dubs China Yuan Manipulator.” Bloomberg Politics.
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