US comments on China’s exchange rate

A report issued by the US has said China’s yuan remains undervalued but welcomed the loosening of the currency peg.

The US Treasury’s semi-annual currency report, which originally was due on 15 April, comes after mounting pressure on the People’s Bank of China to make its exchange rate more flexible against the US dollar.

The US has previously expressed dissatisfaction that China is keeping the value of the yuan low to help its exporters at the expense of overseas competitors.

Trade groups have argued that the yuan, also referred to as the renminbi, is kept up to 40% below what its value should be against the US dollar.

However, Beijing has previously said keeping the yuan stable is “an important contribution” to global recovery.

Prior to a summit of 20 leaders in Canada last month, Beijing loosened its two-year currency peg against the dollar and since that time, the yuan has risen 0.74%.

While the report did note that Beijing had made a “significant” move last month by ending a peg between the value of the yuan and the dollar, it declined to name China as a currency manipulator in the politically sensitive report.

A statement issued by Treasury Secretary Timothy Geithner, with the report, said: “What matters is how far and how fast the renminbi appreciates.”

He added: “We will closely and regularly monitor the appreciation of the renminbi and will continue to work towards expanded US export opportunities in China.”

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