Voice of America
10 Oct 2018, 00:05 GMT+10
BEIJING - China promised Tuesday not to weaken its currency to boost exports during a tariff fight with Washington and rejected U.S. concern about the yuan's sagging exchange rate as groundless and irresponsible.
Beijing has no intention of using 'competitive devaluation,' said a Foreign Ministry spokesman, Lu Kang.
A U.S. official told reporters in Washington the Trump administration is concerned about the weakening yuan. The official spoke on condition of anonymity ahead of Treasury Secretary Steven Mnuchin's trip to Indonesia for meetings of the International Monetary Fund and World Bank.
The tightly controlled yuan has lost almost 10 percent of its value against the dollar this year. That prompted suggestions Beijing might weaken the currency to help exporters that face punitive U.S. tariffs of up to 25 percent.
However, the decline also threatens to damage the Chinese economy by encouraging capital to flow out of the world's second-largest economy, increasing borrowing costs at a time when communist leaders are trying to shore up cooling growth. The central bank intervened in August and tightened controls to discourage speculative trading.
Weaker Chinese economic growth 'is likely to further weigh on' the exchange rate, Luc Luyet of Pictet Wealth Management said in a report.
On Monday, the yuan sank to a 22-month low of 6.93 to the dollar, making one yuan worth about 14.4 cents. It edged up to 6.92 to the dollar on Tuesday.
The U.S. official's comments were 'groundless speculation and irresponsible,' said Lu at a regular news briefing.
Washington and Beijing have imposed punitive tariffs of up to 25 percent on billions of dollars of each other's goods in an escalating fight over U.S. complaints China steals or pressures companies to hand over technology.
Analysts say the yuan's decline has been driven mostly by China's slowing economic growth and the divergence between U.S. and Chinese interest rates.
The margin of decline has been unusually wide because other currencies in the basket used by the Chinese central bank to set exchange rates have not risen along with the greenback.
The central bank is trying to make the yuan more market-oriented and flexible but has intervened when the currency threatened to slide too far.
Its August controls require traders to post deposits for contracts to buy or sell yuan. That allows trading to continue but raises the cost in hopes of deterring speculators.
Beijing imposed similar controls in October 2015 after a change in the exchange rate mechanism prompted markets to bet the yuan would fall. The currency temporarily steadied but fell the following year.
The central bank is likely to prevent the yuan from crossing the 'psychological threshold' of seven to the dollar, Luyet said. That would represent a decline of another 1 percent from Monday's level.
'One should not underestimate the central bank's resolve,' he said.
Get a daily dose of Indianapolis Post news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Indianapolis Post.
More InformationNAYPYIDAW, Myanmar - Almost 10% of the population of Myanmar is now resident overseas. Migrant workers from the country have ...
DUBLIN, Ireland - One of the major international credit rating agencies S&P Global Ratings this week inaugurated their new European ...
NEW YORK, New York - With a total 7.07 billion shares traded on Friday, U.S. stock exchanges were light on ...
NEW YORK, New York - The Big Apple has lost out on its bid to host a new headquarters for ...
LONDON, UK - Airbus on Thursday made a shock announcement that it would cease deliveries of A380s as of 2021. ...
SYDNEY, Australia - Asian stock markets generally tanked on Friday, alrthough the ASX in Australia managed to eke out a ...
CHICAGO, Illinois - Five people have been shot dead and a number of others wounded by a gunman at an ...
WASHINGTON DC - A former U.S. Air Force intelligence specialist who defected to Iran six years ago has been charged ...
NEW YORK, New York - The bombing of a bus in southeast Iran’s Sistan-Baluchestan Province this week that killed 27 ...
WASHINGTON DC - The U.S. Securities and Exchange Commission has filed insider trading charges against a former senior attorney at ...
WARSAW, Poland - U.S. Vice President Mike Pence zeroed in on Iran on Thursday when he addressed Polish Prime Minister Mateusz ...
DARWIN, Northern Territory, Australia - A crackdown on the sending of illicit substances and other illegal items through the post ...
DUBLIN, Ireland - Following its successful acquisition of Hollywood-based Blindlight, Irish video-gaming company Keywords Studios has now announced its latest accomplishment. Keywords r ...
Read More