BEIJING (dpa-AFX) - China took strong exception to the U.S. decision to designate it as a 'currency manipulator', as their central bank came out with a detailed version why the Yuan's value went down.
Describing the U.S. labeling as a 'capricious act of unilateralism and protectionism', the People's Bank of China (PBOC) said Tuesday that it will severely undermine international rules and have material impacts on the global economy and finance.
U.S. Treasury Secretary Steven Mnuchin had determined Monday that China is a Currency Manipulator after the Chinese yuan's value sharply depreciated against the U.S. dollar. Following this development, Trump accused Beijing of manipulating its currency.
Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China's latest actions, the Treasury Department had said in a statement.
The Treasury accused that in recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past to gain an unfair competitive advantage in international trade.
The United States said the Chinese action is violation of its G20 commitments to refrain from competitive devaluation. The Treasury urged China to enhance the transparency of its exchange rate and reserve management operations and goals.
In response to it, Chinese central bank said, 'The Chinese side expresses deep regret over this act. Such a label is not consistent with the quantitative criteria set by the U.S. Treasury itself for the so-called 'Currency Manipulator'.'
Refuting the U.S. allegation of exchange rate manipulation, the Bank said the depreciation of Yuan since the beginning of August 'has been driven and determined by market forces and reflects shifts in market dynamics and volatilities in global foreign exchange markets amid global economic developments and escalating trade frictions'.
PBOC added that though the U.S. has continued to escalate the trade dispute since early 2018, China has kept its promise of not carrying out competitive devaluation. 'China has never used and will not use RMB exchange rate as a tool to deal with the trade frictions'.
The Chinese bank warned that the 'currency manipulator' designation harms the interests of both China and US. It will seriously undermine the international financial order and give rise to financial market volatility, according to PBOC.
On Monday, the Yuan hit its lowest level since 2008, when it valued more than 7 to 1 dollar in exchange rate.
A weaker yuan makes Chinese exports more competitive in the international market, or cheaper to buy with foreign currencies.
Tension between the world's major economies is set to intensify next month when the United Stats starts imposing an additional 10 percent tariff it declared on Chinese products worth $300 billion.
Copyright RTT News/dpa-AFX
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