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US stops short of branding China for currency manipulation
2008-05-15
The United States Thursday accused China of keeping its yuan currency "substantially undervalued," but stopped short of branding Beijing a currency manipulator. "Neither China or any other major trading partner of the United States met the requirements" for US designation of having manipulated its currency, the Treasury said in a highly anticipated report on foreign-exchange rates. Still, the United States ratcheted up a notch its longstanding criticism of China's yuan, or renminbi (RMB). "The recent acceleration (in the yuan's value) in appreciation is a welcome development. However, overall gains remain insufficient," the Treasury report said. The Treasury called on China to maintain the recent faster pace of yuan appreciation, "as the currency remains substantially undervalued" and upward market pressures on the currency "remains strong." With this currency undervaluation, China is creating risks "for itself, the Asian region and the world economy in which China is playing a greater role." "Chinese exchange-rate practices justifiably remain a focal point for the international community," it noted. The Treasury underscored that China's "rigid" forex policy "continues to support larg-scale domestic liquidity creation, which threatens monetary and price stability."
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