IMF says Beijing hasn't manipulated the yuan

The IMF said on Aug 9 in its yearly review of China's economy that the yuan has been "broadly stable" against other currencies, suggesting there has been little intervention by the People's Bank of China.
The IMF said on Aug 9 in its yearly review of China's economy that the yuan has been "broadly stable" against other currencies, suggesting there has been little intervention by the People's Bank of China.PHOTO: EPA-EFE

WASHINGTON • The International Monetary Fund (IMF) sees little evidence that China's central bank has deliberately reduced the value of the nation's currency - a position at odds with the Trump administration's decision last week to accuse Beijing of manipulating the yuan.

The IMF said on Friday in its yearly review of China's economy that the yuan has been "broadly stable" against other currencies, suggesting there has been little intervention by the People's Bank of China. A weaker yuan would give Chinese exporters a competitive price advantage over foreign rivals.

The Treasury Department last Monday named China a currency manipulator for the first time since 1994. The move, reversing its decision in May to keep China off the blacklist, came after Beijing's central bank let the yuan drop to its lowest point in 11 years.

"Clearly, they are manipulating their currency," White House trade adviser Peter Navarro told CNBC on Friday.

China's central bank sets the exchange rate each morning and allows the yuan to fluctuate by 2 per cent against the dollar during the day. The central bank can buy or sell currency - or order commercial banks to do so - to keep the yuan's price from swinging too widely.

In letting the yuan slide, the central bank was responding to economic reality. China's economy is slowing - partly because US President Donald Trump has slapped tariffs on US$250 billion (S$346 billion) worth of Chinese imports - and market pressures are pulling the currency down.

The world's two largest economies are locked in a tariff war over US allegations that China is stealing trade secrets and forcing foreign companies to hand over sensitive technology. Twelve rounds of talks have failed to end the impasse.

ASSOCIATED PRESS

 
A version of this article appeared in the print edition of The Sunday Times on August 11, 2019, with the headline 'IMF says Beijing hasn't manipulated the yuan'. Print Edition | Subscribe