The US government declined to accuse China of mainupulating its currency to secure unfair trade advantages in an annual report to Congress, the Financial Times reported. The move represents a step back by US President Barack Obama, who suggested China was a currency manipulator while campaigning for the presidency, and Treasury Secretary Tim Geithner, who made similar charges during his confirmation process. Geithner released a statement on Wednesday in which he said the US still believed the renminbi was undervalued. He said there were four reasons why the Treasury Department had stopped short of currency manipulation charges: China has “taken steps to enhance exchange rate flexibility”; it has allowed the renminbi to appreciate slightly against the US dollar while other emerging market currencies have fallen; its rate of reserve growth fell in the fourth quarter of 2008; and its fiscal stimulus efforts will help rebalance demand. Reaction in Congress was muted.
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