US: Yuan is still undervalued

| September 17, 2010 | 0 Comments
US: Yuan is still undervalued

US Treasury Secretary, Timothy Geithner has reiterated that China’s currency, the yuan, is still significantly undervalued.

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.

In June, Beijing loosened its currency peg and, while the move was welcomed, Mr Geithner said the yuan had appreciated just 1.9% against the dollar since that time.

The Obama administration is under pressure by US Congress to stand firm with China over its trade practices.

A report issued by the US Treasury in July noted that Beijing had made a “significant” move in June by ending a peg between the value of the yuan and the dollar but it declined to name China as a currency manipulator in the politically sensitive report.

However, some members of the committee have called China a currency manipulator.

Senator Richard Shelby, the committee’s most senior Republican, said, “There is no question that China manipulates its currency in order to subsidise its exports. The only question is: Why is the administration protecting China by refusing to designate it as a currency manipulator?”

The currency issues have led to further trade tensions between Washington and Beijing.

Tags: , currency manipulator, currency peg, , Timothy Geithner, , ,

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