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REPEAT:MNI POLICY:US Tsy Does Not Name China Forex Manipulator

Repeats Story Initially Transmitted at 21:00 GMT Oct 17/17:00 EST Oct 17
By Kevin Kastner
     WASHINGTON (MNI) - The US Treasury released its biannual foreign exchange
report Wednesday, where it once again did not label China as a currency
manipulator. Here are the key takeaways from the report:
     - Treasury said that none of the major trading partner met all three of the
criteria for "enhanced analysis," but did single out the same six countries for
continued watch that it did in the April report: China, Germany, India, Japan,
Korea, and Switzerland. Japan, Germany, and Korea met two of the criteria (large
bilateral trade surplus with the US and high current account balance relative to
GDP). The other three countries met only one criteria, but the trade surplus
China holds with the US was singled out and many times larger than any other
country on the watch list. 
     - Of those six countries, Treasury, as expected, had the most to say about
China. Treasury said "while China does not meet the standards identified in
Section 3004 of the 1988 Act at this time, Treasury is concerned about the
depreciation of the RMB and will carefully monitor and review this determination
over the following 6-month period, including ongoing discussions with the PBOX."
     - Treasury Secretary Mnuchin noted China's lack of currency transparency as
well as the recent depreciation of the RMB "pose major challenges to achieving
fairer and more balanced trade, and we will continue to monitor and review
China's currency practices," including discussions with the PBOC. Treasury said
it is "committed to working toward a fairer and more reciprocal trading
relationship with China."
     - Even with the lack of transparency, Treasury noted that direct exchange
rate intervention by the PBOC "has been limited," but noted the weakening of the
RMB is likely to make the bilateral surplus with the US worse. Treasury said it
expects China to adhere to its commitments to refrain from "competitive
devaluation." It suggested that "China could pursue more market-based economic
reforms that would bolster confidence in the renminbi."
--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

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