The Trump administration again refrained from labelling China a currency manipulator on Tuesday (28 May), a decision that leaves one of the president’s campaign promises unfulfilled but avoids further escalation in the trade war between the world’s two largest economies.
The Treasury Department issued its semi-annual foreign-exchange report to Congress, expanding the number of countries it scrutinises for currency manipulation to 21 from 12. Five countries – Ireland, Italy, Vietnam, Singapore, and Malaysia – joined China, Japan, South Korea, and Germany on a watchlist for manipulation, while India and Switzerland were removed.
The report was officially due in mid-April but was delayed partly due to the changes to the criteria used to evaluate countries, a senior Treasury official told reporters Tuesday.
Designation as a currency manipulator comes with no immediate penalties but can rattle financial markets. Vietnam was at risk to be designated, Bloomberg News reported earlier this month, but avoided the label after officials visited Washington last week (ended 24 May).
Currency policy has emerged as US President Donald Trump’s latest tool to rewrite global trade rules that he says have hurt American businesses and consumers. He has made foreign-exchange policy a key piece of trade deals with Mexico, Canada, and South Korea, and it is expected to be part of an agreement with China, should one be reached.
The administration last week ramped up its focus on foreign exchange, proposing tariffs on goods from countries found to have undervalued currencies. The Commerce Department’s move would let US-based companies seek anti-subsidy tariffs on products from countries found by Treasury to be engaging in competitive devaluation of their currencies. Currently no country meets that criteria.
Treasury’s currency report and the Commerce Department’s proposal are separate and follow different laws, according to a senior Treasury official.
The number of countries on the US watch list expanded after Treasury Secretary Steven Mnuchin lowered the threshold for qualification.
“Treasury takes seriously any potentially unfair currency practices, and Treasury is expanding the number of US trading partners it reviews to make currency practices fairer and more transparent,” he said in a statement.
The US has not labelled a major trade partner a currency manipulator since 1994. – Bloomberg News.
On Tuesday (28 May), the US Dollar Index (DXY) climbed 0.35% to 97.952, the pound fell 0.21% to USD1.2653, the euro lost 0.30% to USD1.1160, and the yen gained 0.12% to 109.38 per dollar.
The information published by DBS Bank Ltd. (company registration no.: 196800306E) (“DBS”) is for information only. It is based on information or opinions obtained from sources believed to be reliable (but which have not been independently verified by DBS, its related companies and affiliates (“DBS Group”)) and to the maximum extent permitted by law, DBS Group does not make any representation or warranty (express or implied) as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions and estimates are subject to change without notice. The publication and distribution of the information does not constitute nor does it imply any form of endorsement by DBS Group of any person, entity, services or products described or appearing in the information. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment or securities. Foreign exchange transactions involve risks. You should note that fluctuations in foreign exchange rates may result in losses. You may wish to seek your own independent financial, tax, or legal advice or make such independent investigations as you consider necessary or appropriate.
The information published is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into any transaction in any jurisdiction or country in which such offer, recommendation, invitation or solicitation is not authorised or to any person to whom it is unlawful to make such offer, recommendation, invitation or solicitation or where such offer, recommendation, invitation or solicitation would be contrary to law or regulation or which would subject DBS Group to any registration requirement within such jurisdiction or country, and should not be viewed as such. Without prejudice to the generality of the foregoing, the information, services or products described or appearing in the information are not specifically intended for or specifically targeted at the public in any specific jurisdiction.
The information is the property of DBS and is protected by applicable intellectual property laws. No reproduction, transmission, sale, distribution, publication, broadcast, circulation, modification, dissemination, or commercial exploitation such information in any manner (including electronic, print or other media now known or hereafter developed) is permitted.
DBS Group and its respective directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned and may also perform or seek to perform broking, investment banking and other banking or financial services to any persons or entities mentioned.
To the maximum extent permitted by law, DBS Group accepts no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) of any kind arising from or in connection with any reliance and/or use of the information (including any error, omission or misstatement, negligent or otherwise) or further communication, even if DBS Group has been advised of the possibility thereof.
The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information is distributed (a) in Singapore, by DBS Bank Ltd.; (b) in China, by DBS Bank (China) Ltd; (c) in Hong Kong, by DBS Bank (Hong Kong) Limited; (d) in Taiwan, by DBS Bank (Taiwan) Ltd; (e) in Indonesia, by PT DBS Indonesia; and (f) in India, by DBS Bank Ltd, Mumbai Branch.