Since Donald Trump took office in January 2017, the dollar has weakened substantially against most currencies, including the Chinese yuan. Photo: Reuters
Washington/Beijing: US President Donald Trump accused Russia and China on Monday of devaluing their currencies while the United States raises interest rates, prompting China to accuse the United States of sending confusing messages.
“Russia and China are playing the Currency Devaluation game as the US keeps raising interest rates. Not acceptable!” Trump said in a Twitter post.
Speaking in Beijing on Tuesday, Foreign Ministry spokeswoman Hua Chunying noted that what Trump said seemed to contradict the US Treasury’s report that refrained from naming any major trading partners as currency manipulators.
“So it seems like the information being released by the US side is a bit chaotic,” she told a daily news briefing.
Hua said it reminded her of a poem by the founder of modern China, Mao Zedong, about remaining calm in the midst of chaos.
“No matter what others say we will continue to steadily promote the reform of the renminbi exchange rate mechanism,” she added, without elaborating, using the currency’s formal name.
Trump’s tweet referred to what he sees as unfair trading advantages: If a country’s currency is artificially low, its exports are more competitive. Higher US interest rates would generally increase the value of the dollar, making US exports more expensive.
Since Trump took office in January 2017, the dollar has weakened substantially against most currencies, including the Chinese yuan and, until the United States imposed sanctions on Russia in the last few weeks, the ruble.
Against the yuan, the dollar has fallen by 8.6% since 20 January 2017, while it has appreciated 4.5% against the ruble.
Until the United States announced sanctions on Russian oligarchs this month, however, the dollar had weakened by nearly 4% against the Russian currency.
That gain was entirely erased by a two-day drop of 8.4% in the ruble on 9 and 10 April.
More widely, the US dollar index, which measures the greenback’s value against a basket of major trading partner currencies, has declined by 11.2% since Trump became president. The US Treasury, in a semiannual report on Friday, again refrained from naming any major trading partners as currency manipulators. The report came as the Trump administration pursues potential tariffs, negotiations and other restrictions to try to cut a massive trade deficit with China.
The report did not mention Trump’s recent threats to impose billions of dollars worth of tariffs on Chinese goods over Beijing’s intellectual property practices, or pending Treasury restrictions on Chinese investment in the United States.
White House spokeswoman Sarah Sanders later told reporters aboard Air Force One on a trip by the president to Miami that China is on a US Treasury Department watch list for being potentially labelled a currency manipulator. Reuters