IMF does not support the “China manipulated exchange rate” theory

“The US government listed China as a currency manipulator, but did not see any support in the latest report of the International Monetary Fund (IMF).” Germany’s “World News” said on the 11th, local time on the 9th, Washington-based IMF The issuance of China’s annual fourth-term consultation report, which believes that the RMB has been generally stable in the past year, and the IMF staff believes that the exchange rate of the RMB is basically in line with the economic fundamentals. Regarding the allegations that the top US government had identified China as a “currency manipulator”, many foreign media believe that the IMF report does not support this.

The renminbi “does not significantly overestimate or underestimate”

The US “politics” website said on the 9th that the new report of the IMF did not provide support for the US accusation of China’s exchange rate manipulation. In an annual review of China’s economic policy, the organization said that after the fall of the RMB against the US dollar from mid-June to early August last year, China actually took measures to support the RMB exchange rate. Overall, the renminbi has been “overall stable” in the past year.

According to the IMF’s report, China’s current account surplus as a percentage of GDP fell by about 1 percentage point to 0.4% in 2018, and is expected to remain at 0.5% in 2019. The report believes that since August this year, the RMB exchange rate has depreciated to a certain extent, but the basket is generally stable relative to other currencies of the IMF Special Drawing Rights (SDR) (US dollar, Euro, Japan and British pound). Since the fourth clause of last year, the real effective exchange rate of the RMB has depreciated by about 2.5%.

The value of the renminbi in 2018 “is basically in line with the medium-term fundamentals and ideal policies, that is, there is no obvious over- or under-estimation,” James Daniel, head of the Chinese delegation of the International Monetary Fund, told reporters on the conference call that the IMF encouraged China to adopt more The flexible exchange rate responds to these external pressures and releases monetary policy to cope with domestic demand.

Determined that China manipulated the exchange rate “too ruthless”

Last Monday, the exchange rate of the RMB against the US dollar fell below “7”. In addition, the US announced that it intends to impose a 10% tariff on the US$300 billion Chinese exports to the US. The three major US stock indexes hit the biggest one-day drop in the day. US Treasury Secretary Nouchin announced on the 5th that “China is defined as a currency manipulator under US law.” White House trade adviser Navarro also told the US media on the 9th that China is “manipulating the currency.”

Sobel, a former US Treasury official and chairman of the US Official Monetary and Financial Institutions Forum, said on the organization’s website last week that the US decision to list China as a currency manipulator is a “reckless move.” “The Trump administration now argues that China has a crime of manipulation because China has not acted to support its currency in the face of downward pressure on the market.”

“China is not a currency manipulator!” Switzerland’s “New Zurich News” pointed out on the 11th that all kinds of data show that the United States accused China of being a “currency manipulator” is untenable. The renminbi has basically been in line with economic fundamentals in the past year. The data of the Bank for International Settlements (BIS), based in Basel, Switzerland, also shows that in the past 20 years, the bank’s nominal effective exchange rate and real effective exchange rate have appreciated by about 30%, and the exchange rate of the RMB against the US dollar has appreciated by 20%. . The renminbi is the strongest currency among the major international currencies. On the other hand, the euro is one of the most valuable currencies.

Who is really intervening in the exchange rate?

According to the US “Capitol Hill” website, US President Trump continued to pressure the Fed to cut interest rates on the social media on the 8th local time to weaken the US dollar to promote exports to boost the economy. He believes that the strength of the dollar will hurt the US manufacturing industry.

The report believes that the US president has always regarded the strong dollar as a symbol of American strength, but Trump has weakened the dollar and broke the strong dollar policy for more than 20 years, but it has further invaded the independence of the Fed.

The Swiss “Financial News” pointed out on the 11th that China will not actively depreciate its own currency. Instead, Trump frequently intervenes in the US dollar exchange rate. The article pointed out that today, many countries in the world are relaxing monetary policy at the same time because the global economic outlook is bleak. Therefore, this is a positive measure: central banks are all aiming at stimulating macroeconomic needs. If even such measures can be called currency wars, then the world economy really needs such a currency war to maintain its vitality. Moreover, China will not join a depreciation competition at all. A further weakening of the renminbi will certainly reduce the cost of exporting Chinese goods overseas, but it will also have serious consequences in the country. Chinese companies that borrow high-value dollar debts will fall into a repayment crisis, and the cost of importing raw materials will also rise. At the same time, there is a risk of capital flight.