US softens stance on yuan

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WASHINGTON, D.C.: The US Treasury on Monday (Tuesday in Manila) softened its longstanding position that the Chinese currency is “significantly” undervalued, saying it wants to see how market forces move the newly flexible yuan.

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In its semi-annual report to Congress on whether trading partners artificially hold down their currencies, it said the yuan “remains below its appropriate medium-term valuation,” a less critical view than that of the past several years.

Instead, the department said it is monitoring how Beijing implements its exchange-rate policy since an August 11 devaluation that signaled a new approach by the People’s Bank of China. Between then and the end of September, the currency, also known as the renminbi, depreciated 2.3 percent against the dollar.

But, the report said, against market expectations of a much deeper fall, data suggests Beijing “sold a significant amount of reserves in August to stem the RMB decline.”

AFP

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