The US has warned Beijing not to go back to manipulating its currency, following a sharp depreciation of the renminbi since the start of 2014.
“If the recent currency weakness signals a change in China’s policy away from allowing adjustment and moving toward a market-determined exchange rate, that would raise serious concerns,” said a senior Treasury official ahead of this week’s IMF, World Bank and G20 meetings in Washington.
The renminbi has fallen more than 2.5 per cent against the US dollar since mid-February, a small amount for most emerging markets but a dramatic shift for the Chinese currency following years of slow and steady appreciation. It trades at Rmb 6.20 against the US dollar, roughly the same level as this time last year.
The US comments highlight concern in Washington that China will be tempted to respond to a slowing economy by holding down its currency in order to boost exports. Such moves could lead China to reduce global demand at a time when several other regions of the world, such as the eurozone, are weak. That in turn could hamper US growth.