The United States on Monday designated China as a currency manipulator and will work with the International Monetary Fund to address the issue, the Treasury Department said as the trade war between two countries escalated further.
Earlier in the day, US President Donald Trump accused China of using currency manipulation to steal US businesses and factories which has hurt the job market. Shortly after his tweet, the Dow Jones Industrial stock index plunged by more than 900 points before closing down 767.
“Secretary (Steven) Mnuchin, under the auspices of President Trump, has today determined that China is a currency manipulator,” the Treasury Department said in a statement.
“As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions,” it said.
The Treasury stated that China had a long track record of keeping its currency artificially low through massive interventions in foreign exchange markets and recently Beijing had made further moves to devalue its currency.
“The context of these actions and the implausibility of China’s market stability rationale confirm that the purpose of China’s currency devaluation is to gain an unfair competitive advantage in international trade,” the statement said.
The Chinese government had publicly admitted that they controlled the Renminbi (RMB) exchange rate and remained prepared to do so in the future, the Treasury further said.
A weaker yuan could greatly neutralise the effects the US has intended to cause by imposing tariffs on Chinese imports, experts have said.
China has requested that its state-owned companies refrain from buying US imports, according to media reports.