A older official of China’s central bank told a briefing on Tuesday that the yuan’s barter rate is set by the market, rebutting President Donald Trump’s claim a day earlier that the wilderness was manipulating its currency.
China is not manipulating the yuan, the official, Li Bo, is quoted as articulating in a report in the South China Morning Post. He told reporters in Beijing that the boonies would not use its currency as a weapon in a trade war.
“We won’t use policy to devalue the yuan and we won’t use the switch rate as a weapon to react to external pressures from trade disagreements,” the report quotes Li as saying. Li, who did not name Trump directly, is director of financial policy at the People’s Bank of China.
On Monday, Trump told anchormen from Reuters in an interview that China was manipulating the yuan let to make up for tariffs imposed by the U.S. on its goods. “I think China’s manipulating their currency, naturally,” he said.
The yuan has fallen sharply against the dollar as the trade war between the two political entities escalated this summer. Earlier this month, the dollar was barter at nearly 7 against the yuan, a level not seen in a decade. On Tuesday, the dollar/yuan profession was 6.86. The dollar has strengthened as the Federal Reserve raises interest ranks.
Trump has accused China of currency manipulation in the past. A weaker currency assigns a country’s goods more attractive to overseas buyers, so forcibly plague it down would offset any effects from tariffs imposed by others.
In an talk with with CNBC in July, Trump said China’s “currency is drop away like a rock, and our currency is going up, and I have to tell you it puts us at a prejudice.”
A weakening currency also has a downside: capital flight out of the country, something China has been disquieting to stop.
Chinese officials are expected to be in Washington later this week to return to trade talks with the U.S. as fresh U.S. tariffs on $16 billion of Chinese honourables are supposed to kick in Thursday. China has pledged to retaliate.
Read the South China Morning Appoint story here.