Deutsche Bank Says Trump Is Likely To Call China A Currency Manipulator

Dollar and Euro Currency

Deutsche Bank Says Trump Is Likely To Call China A Currency Manipulator

Trump and his top trade advisors have repeatedly accused China of cheating the United States by maintaining an artificially weak Chinese Yuan Renminbi.

But now, a team of top economists and strategists led by Michael Spencer who works as the Chief Economist and Head of Research at Deutsche Bank has claimed that the current US administration might be planning to transform its rhetoric into action. They said that the US may officially call China the leading currency manipulator. The team says that Trump’s aim is to impose harsh penalties such as slapping higher tariffs on goods imported from China to the US.

Mr Michael Spencer and his team of economists say that this move is likely to happen in the coming months. The decision on who should be slapped with harsh penalties as a result of currency manipulation is the usually the work of the Treasury Department's Report on foreign exchange practices of participating nations. This report has not been released to determine which participating country is carrying out currency manipulation. It is expected to come out in April.

The team has argued that Trump’s administration has shown serious interest to quickly deliver on his campaign promises. One of the promises was to combat China’s allegedly unfair policies regarding trade.

“In the next few weeks, Trump and his team of advisors may officially declare China a top currency manipulator and propose harsh penalties such as slapping tariffs on all Chinese imports unless it stops manipulating its currency and other unfair trade policies,” Michael and his team told reporters.

Michael and his team don’t expect China to float or devalue its currency should the United States launch an official accusation. However, interest-rate hikes, which for many years have been one of the defences of China’s currency, would offer a more effective defence of the renminbi.

The team also said that China has hinted that they will respond by slapping the same penalties on U.S. imports if the US takes their action. These moves would create a trade war between the world’s number 1 and number 2 largest economies, which could further have sweeping implications on other countries.

China authorities have been making efforts to control the rate at which its currency is depreciating since June 2014, the period when the US dollar started to become stronger against its rival currencies. Since June 2016, the China’s central bank has been making efforts to keep the renminbi stable against other top currencies.

To accomplish this mission, Chinese authorises have been forced to halt its policies which are aimed at liberalising its capital account and instead put more efforts to make its currency more widely available. Another step which the country has taken is to liquidate almost a quarter of its foreign currency reserves.

China managed to avoid being accused of currency manipulation during Obama’s presidency. In fact, the last time China was accused by the U.S for manipulating its currency is in 1994.

However, this second largest economy is one of six nations in the Treasury’s monitoring list. According to the Treasury Department, for a country to be found guilty of currency manipulation, it must have a material current-account surplus, bilateral- trade surplus with the United States and proven guilty of engaging in continuous one-sided intervention in the currency market.

Company Details

Deutsche Bank Comments on Trump

Get a quick quote

Open Account with TORFX

TORFX are located at:
Penlowarth, Penzance, Cornwall, TR18 4ED, United Kingdom

Get a Quick Quote

Newsletter Signup to CMT

Sign up to our foreign exchange newsletter to receive news updates directly by email

Compare Money Transfer will not Share your details!

Bank Exchange Rates Comparison

High St Bank Exchange Rate

All Rights Reserved: Copyright 2006 - 2018 Compare Money Transfer Limited offering FCA Regulated Suppliers - 34 New House, 67-68 Hatton Garden, London, EC1N 8JY. +44 (0) 843 357 4882