Thursday, December 11, 2008

Yuan Watch : 'Manipulation' would hurt their feelings

Editor: Sharon Li
11 Dec 2008 10:03:19 GMT

WASHINGTON --The U.S. Treasury Department once again declined to designate China as a currency manipulator Wednesday, while noting that the government intervenes heavily in the yuan.

In its report to Congress on International Economic and Exchange Rate Policies, the Treasury said none of largest trading partners of the U.S. is manipulating its currency against the dollar.

Treasury said it hasn't found that any major trading partner of the U.S. met the standards as identified in the Omnibus Trade and Competitiveness Act of 1988 during the first half of 2008.

The law says the Treasury secretary will analyze the exchange-rate policies of foreign countries. It says the secretary will consider whether countries manipulate the rate of exchange between their currencies and the U.S. dollar for purposes of preventing effective balance-of-payments adjustments or gaining unfair competitive advantage in international trade.

In addition, the report says gradual reform and heavy government intervention characterized China's exchange rate regime.

It also said China's central bank engaged in record levels of foreign exchange market intervention.

"Gradual reform and heavy government intervention continue to characterize China's managed float exchange rate regime," according to the report.

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