No major trading partners of the United States, including China, have manipulated their currencies over the past six months to keep them undervalued, the U.S. Treasury Department said on Friday.
In its Semi-Annual Report to Congress on International Economic and Exchange Rate Policies, the department noted that the Chinese currency renminbi or RMB was still facing downward pressure at present, but in the medium term, the core factors that have supported the RMB remain in place, including high net savings, a sizable and growing current account surplus, and improved terms of trade.
China's central bank Deputy Governor Yi Gang recently said in Washington that considering China's current account, foreign direct investment and outward direct investment, the RMB exchange rate is still within the equilibrium level.
David Lipton, first deputy managing director of the International Monetary Fund, also said that the RMB is broadly in line with fundamentals.
In the same report, the U.S. Treasury Department put five economies -- China, Japan, Germany, South Korea and China's Taiwan -- on a monitoring list to closely follow their economic trends and foreign exchange policies.
It is the first time for the U.S. government to implement the new provisions of the Trade Facilitation and Trade Enforcement Act of 2015, which provides new tools for the Treasury to judge "unfair currency practices" of its major trading partners.
None of the five economies met the criteria for enhanced scrutiny, which is triggered when an economy has significant bilateral trade surplus with the United States, a material current account surplus and engages in persistent one-sided intervention in the foreign exchange market. Meeting all these three criteria would trigger potential penalties.
In accordance with the act, the Treasury has established the new monitoring list, which finds that the five economies met only two of the three criteria.
