Surprise Surprise. US Not Pleased With Recent Yuan Depreciation

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.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu