America has been on a roll lately, making friends in all the right places. Syria, Afghanistan, Egypt, Iraq, Iran, Russia, Ukraine, North Korea, Libya, China, etc…. Continuing in this tradition of fairness and brotherhood, the US warned China on it’s recent currency depreciation, raising “serious concerns” and suggesting that China gets back to the path of currency appreciation. You know, since everyone believed the Chinese Yuan would appreciate when floated at market.
That would be a solid advice if the US wasn’t trying to do exactly the same thing. Even thought the US Treasury/FED has been trying to inflate the dollar away over the last 2 decades (without too much luck), it is their Chinese counterparts that are succeeding. Yet, not by design. It appears that Yuan is declining based on market forces as opposed to government intervention. Either way, the US has no business telling other nations what to do with their currencies when every nation, more or less, is trying to succeed in competitive debasement of their own currency at the expense of their neighbors.
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What The US Told China In Regards To Currency Depreciation Is Disturbing Google
Reuters Writes: U.S. warns China over currency depreciation
(Reuters) – The United States warned Beijing on Monday that the recent depreciation of the Chinese currency could raise “serious concerns” if it signaled a policy shift away from allowing market-determined exchange rates.
Washington has been pressing China for years to allow its currency to trade at stronger values. A weak yuan makes Chinese exports cheaper for U.S. consumers at the expense of U.S. producers. A weaker yuan also makes Chinese consumers less able to buy foreign goods.
Last month, U.S. Treasury Secretary Jack Lew welcomed a decision by China to allow its currency to vary more against the dollar in daily trading.
Monday’s comments by a senior official from the Treasury Department suggested the United States was not completely sold on China’s intention to reduce authorities’ interventions in exchange markets.
“If the recent currency weakness signals a change in China’s policy away from allowing adjustment and moving toward a market-determined exchange rate, that would raise serious concerns,” the official, who asked not to be named, told journalists in a phone call.
In comments that outlined U.S. positions before meetings later this week of the International Monetary Fund and between Group of 20 nations, the official noted the widening of China’s currency trading band came just after a drop in the yuan’s value that coincided with reports of “considerable intervention” in exchange markets by Chinese authorities. That is exactly the sort of behavior Washington wants Beijing to ditch.
The United States also appears likely to pressure Europe at the meetings to act more decisively to fix its troubled banking sector.
The Treasury official said recent economic data from Europe showed the region was experiencing “chronic low inflation and weak demand.” That appeared to be a nod to growing concerns that Europe’s economy is so weak it risks falling into a dangerous spiral of falling prices and wages known as deflation.
“More needs to be done to support growth,” the Treasury official said.
The official had blunt words for other economic powers as well, saying that Japan should avoid engaging in too much fiscal austerity.
He said U.S. sanctions on Russian officials were already having an impact on Russia’s economy. The official also chided emerging markets for going too slowly in adopting free-floating currencies.
“Resistance in many emerging markets to moving more quickly to market-determined exchange rate regimes is hindering the rebalancing needed to ensure a lasting, strong global recovery,” the official said.