BEIJING (MNI) – It’s too much to call the current spat over
exchange rates a “currency war,” the official Xinhua News Agency said,
though any problems in the global markets are a result of U.S.
politicians, the Federal Reserve’s money printers and stirring by the
western media.

The mouthpiece of the Chinese government said in an editorial late
Sunday that western media have exaggerated the current state of affairs,
saying that a multi-front currency war would be a “suicide mission” that
would only cause damage without benefit.

But there are tensions over exchange rates, Xinhua acknowledged,
laying the blame firmly at Washington’s door.

“On the surface, the so called ‘currency war’ started with heated
Chinese and U.S. disputes over the yuan exchange rate,” it said.

“However, the real reason for this round of ‘currency war’ lies
with the U.S … many U.S. politicians are using the Chinese yuan as a
scapegoat for current U.S. economic difficulties ahead of the November
election.”

Moreover, governments from Brazil to Singapore have been forced to
intervene to offset the appreciation of their currencies against the
U.S. dollar as a result of the Federal Reserve’s ultra-loose monetary
policy, Xinhua said, accusing the U.S. of a double standard.

“U.S. politicians believe the Fed is ‘legal and reasonable’ in
printing money to depreciate the U.S. dollar while other depreciation by
other economies to safeguard their economic and financial stability is
‘illegal’,” Xinhua said.

Even though the yuan is appreciating, China can’t solve the
appreciation pressure felt by other countries and can’t prevent other
economies from intervening in the currency markets.

The U.S. Treasury Department on Friday delayed a long-awaited
currency report which could have labelled China a currency manipulator
and opened the door to punitive action against Beijing’s exchange rate
policies.

U.S. officials have made it clear that they recognize the recent
appreciation of the Chinese yuan, but also that they want to wait until
after next month’s G-20 meetings in Korea before delivering their
verdict on Chinese government currency policies.

Treasury Secretary Timothy Geithner said last week that countries
have had no choice but to intervene in the foreign exchange markets
because China’s policy of holding down the yuan has eroded their
competitiveness.

Xinhua said that the solution to any “currency war” is to establish
a new international monetary system and urged that international society
continue to work together.

beijing@marketnews.com
** Market News International Beijing Newsroom: 86-10-5864-5274 **

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