I was expecting the US Treasury report Tuesday after US time. But, nope.
So, still awaiting.
The report comes out twice a year and it names countries the US says are manipulating their currency as well as those on a list they are watching closely …
For being named a manipulator the criteria is restrictive. I have posted on this before, including why its ludicrous that Switzerland, for example, that had a ceiling in place for the CHF for many years and actively intervened to defend it, but was never named.
But, its not just me … here is Barclays on the criteria:
- Criteria for inclusion on the list: (1) a significant bilateral trade surplus with the US is one that is at least $20bn; (2) a material current account surplus is one that is at least 3% of GDP; (3) persistent, one-sided intervention whereby the economy purchased foreign exchange on net for eight of the 12 months, totaling at least 2% of an economy's GDP over 12 months.
So, what of China? Barclays again:
- We believe that China will remain on the US Treasury's monitoring list, given its large trade surplus with the US, but will not be labeled a currency manipulator.
- This is because China does not meet the official criteria under the "2015 Act" . In fact, since the last US Treasury report in April, China's current account has declined further to 0.52% of GDP in Q2 18 and its FX reserves have declined by USD74bn, indicating PBOC efforts to contain renminbi depreciation.
- That said, some uncertainty remains, given rhetoric from the White House and the greater flexibility granted to the Treasury under the Omnibus Trade and Competitiveness Act of 1988, that considers a wider range of subjective factors such as FX reserve coverage, capital controls, monetary policy, or inflation developments under its currency manipulation criteria.
