The US Treasury Department dropped its designation of China as a currency manipulator just two days before negotiators from Beijing and Washington are set to sign the first phase of the trade deal between the two countries, reported the Wall Street Journal.
“China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability,” Treasury Secretary Steven Mnuchin said in a statement on Monday.
Mnuchin’s statement accompanied the Treasury’s foreign-exchange report, which addresses the currency practices and macroeconomic policies of major US trading partners. The report, typically released twice a year, is the Treasury’s primary vehicle for officially designating countries as currency manipulators.
The report said the trade agreement’s chapter on Chinese currency practices addresses many of the concerns raised when the US applied the manipulator designation in August. As part of the agreement, China will commit not to depress its exchange rate and will make additional disclosures about its foreign-exchange practices. The Treasury also noted that the Chinese currency had strengthened in recent months, a development that helps address US concerns that the RMB is too weak.