U.S. warns China over currency depreciation
WASHINGTON (Reuters) - The United States warned Beijing on Monday that the recent depreciation of the Chinese currency could raise "serious concerns" if it signaled a policy shift away from allowing market-determined exchange rates.
Washington has been pressing China for years to allow its currency to trade at stronger values. Last month, U.S. Treasury Secretary Jack Lew welcomed a decision by China to allow its currency to vary more against the dollar in daily trading.
Monday's comments by a senior official from the Treasury Department suggested the United States was not completely sold on China's intention to reduce authorities' interventions in exchange markets.
"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," the official, who asked not to be named, told journalists in a phone call.
A weak yuan makes Chinese exports cheaper for U.S. consumers at the expense of U.S. producers. A weaker yuan also makes Chinese consumers less able to buy foreign goods.
In comments that outlined U.S. positions before meetings later this week of the International Monetary Fund and between Group of 20 nations, the official noted the widening of China's currency trading band came just after a drop in the yuan's value that coincided with reports of "considerable intervention" in exchange markets by Chinese authorities. That is exactly the sort of behavior Washington wants Beijing to ditch.
China's foreign ministry, which has no say in currency policy but is the only government department to regularly answer foreign reporters' questions, said Beijing was committed to reform.
"We will continue to resolutely push forward reform of the renminbi exchange rate mechanism," ministry spokesman Hong Lei told a daily news briefing in Beijing on Tuesday, using the currency's formal name.
The United States also appears likely to pressure Europe at the meetings to act more decisively to fix its troubled banking sector. Continued...