Mnuchin warns China about devaluing its currency
- The US has warned China not to engage in competitive devaluation.
- China's currency, the yuan has dropped nearly 9% in the past six months.
- Watch the Chinese yuan trade in real time here.
As trade tensions between the world's largest economies continue to escalate, the US has warned China not to weaken its currency as an alternative to tariffs.
"As we look at trade issues there is no question that we want to make sure China is not doing competitive devaluations," Treasury Secretary Steve Mnuchin told the Financial Times in an interview published Wednesday. "We are going to absolutely want to make sure that as part of any trade understanding we come to that currency has to be part of that."
The Chinese yuan has continued to slide after the Bank of China on Sunday cut its reserve requirement ratio, or the amount of money commercial banks have to store. It has shed more than 6% in value this year and is approaching a key level of seven per dollar, marking its weakest point since 2008.
A trade war with the US has added to concerns about an already slowing economy, raising questions about how far the central bank might let the yuan fall. A weaker currency typically boosts exports.
The Trump administration has imposed tariffs on $250 billion worth of Chinese goods, prompting Beijing to retaliate. The president said this week he is prepared to place duties on all imports from China if trade tensions continue.
On the campaign trail, Trump had repeatedly vowed to label China a currency manipulator. But the US Treasury has declined to do so several times this year in semiannual reports on the foreign exchange policies of major trading partners.
The next Treasury report on China's currency is due next week.
