The U.S. Treasury Department said China’s yuan is “significantly undervalued” and hasn’t strengthened as fast as needed, while declining to name the country a currency manipulator.
The yuan “is appreciating, but not as fast or by as much as needed,” the department said in its semi-annual currency report to Congress released in Washington today.
“The evidence that China has resumed large-scale purchases of foreign exchange this year, despite having accumulated reserves that are more than sufficient by any measure, is suggestive of actions that are impeding market determination and a currency that is significantly undervalued,” the Treasury said.
The yuan fell for a fourth day today, the longest losing streak since July, as the central bank cut the currency’s reference rate amid a rally in the dollar. The People’s Bank of China cut its fixing, which limits the yuan’s daily moves to 1 percent on either side, by 0.06 percent to 6.1412 per dollar, the weakest since Oct. 17.
On Japan, the Treasury said it will “closely monitor” the government’s policies “and the extent to which they support the growth of domestic demand.”
The Treasury said it will urge South Korea to limit its foreign-exchange interventions “to the exceptional circumstances of disorderly market conditions and to commit to transparency with respect to foreign exchange intervention.”