The U.S. Treasury is mandated by law to issue a report every six months on whether any country is manipulating its currency for an unfair trade advantage. Although, or more likely because the exchange rate between China’s yuan and the U.S. dollar, is so political charged now, the Treasury has booted down the road taking a decision on whether to declare China a currency manipulator as charged by so many in the U.S. It says it will wait not just until after the U.S. mid-term Congressional elections on Nov. 2nd, but also the Seoul summit meeting of G-20 leaders on Nov.11 and the Asia Pacific Economic Cooperation forum summit on Nov. 13-14. Those meetings may come to some agreement, though we think that unlikely, so the U.S. Treasury’s delay looks like a Hail Mary pass while its scrambles, to mix a metaphor, to take a policy high-road:
The challenge of building a stronger, more balanced and sustainable global economic recovery is a multilateral challenge, not just the responsibility of China and the United States. It requires policy reforms in all major economies.
We know that is right, but good luck with that anyway.