
U.S. Treasury Department Labels China a Currency Manipulator - hker
https://www.bloomberg.com/news/articles/2019-08-05/u-s-treasury-department-labels-china-a-currency-manipulator
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viraptor
Could someone explain why this part makes sense?

> after the country’s central bank allowed the yuan to fall

They got taxed extra, limiting the economy / exports. This means less interest
in investment in their market and currency. That seems like a legitimate
reason for the currency to lose its value in relation to the country taxing
it.

Why is there an implication that this is "allowed" or a strategic response?
Not claiming it isn't, and I see how it benefits China in some ways - I'd just
like to understand how it's different from a non-manipulated price drop.

~~~
steve19
China's government policy and central bank tightly control the exchange rate
and only allow it to fluctuate within certain predetermined bands.

"An official re-adjustment of the mid-point rate for the trading band is
announced by the country's Foreign Exchange Trading Center at 9:15 a.m. each
day, Shanghai time."

[https://www.fxcm.com/uk/insights/how-does-china-control-
exch...](https://www.fxcm.com/uk/insights/how-does-china-control-exchange-
rates/)

So each day the government says what the currency should be and gives traders
very little wiggle room.

As for the first question should they or shouldn't they do it, I don't know.

~~~
seanmcdirmid
That is only true to a point: they have to back it up with forex buy/sell
orders , or their trading rate becomes meaningless and the black market comes
back to set a more realistic rate (as was the case in the late 90s during my
first trip to china).

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gervase
In case anyone else was curious, it seems the penalties for being so labelled
are enforced through the imposition of tariffs [0].

If the IMF / WTO agree with the Fed's characterization (which is doesn't
currently look like will be the case, from what I read in the parent article),
then it could have broader impacts, i.e. by the imposition of tariffs by
companies which are not currently in a trade war with China.

However, since the US is already levying (heavier) tariffs against China, this
is currently being viewed as more of a public / foreign relations move, as it
seems unlikely that it will trigger even stronger tariffs.

[0]: [https://www.nytimes.com/2019/05/23/us/politics/trump-
currenc...](https://www.nytimes.com/2019/05/23/us/politics/trump-currency-
manipulators.html)

