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Share06 August 2019The administration of President Donald Trump has accused China, for the first time since 1994, of being a "currency manipulator". And this after the Commercial Bank of Beijing has allowed a weakening of the yuan to its lowest level since 2008, with an exchange rate lower than 7 yuan compared to the US dollar, in response to the new duties imposed by Trump on $ 300 billion of products made in China .
On Twitter Trump has accused Beijing of depreciating its currency to "steal our companies and factories, hurt our work, depress the salaries of our workers and damage our farmers' prices. No more!"
Before Trump, it was in the early 1990s that US President Bill Clinton accused China of being a currency manipulator.
The US administration has therefore gone from words to deeds. After Trump's tweet, Treasury Secretary Steven Mnuchin announced this designation. For the moment the move is symbolic, since punitive actions are not foreseen, but America could end up imposing sanctions. However, the effect on the markets was immediate. Dow futures plummeted by 1.4% and S&P 500 futures by 1.3% while the yen (considered a safe haven in times of uncertainty) strengthened on the greenback and the yuan weakened further ( a dollar bought 7.1139 yuan against 7.0988 of the 23 Italian).
In a statement released about two hours after the end of the worst session of 2019 for Wall Street indices, Mnuchin explained that "on the advice of President Trump" he determined that China manipulates its currency. It has done so outside the traditional process: in general, the US Treasury makes these designations in a report delivered every six months to the Congress; the next edition of the document will arrive in October. The Treasury secretary said he will "contact the International Monetary Fund to eliminate the unfair competitive advantages created by China's latest actions".