The US Treasury Department has concluded that China is not deliberately devaluing its currency, sources told Bloomberg, ahead of the release of the Treasury’s biannual foreign currency report next week.
Treasury Secretary Steve Mnuchin has yet to confirm the verdict, however, and may still publish the report supporting the allegations of manipulation.
Mnuchin has been pressured by the President to denounce China as a currency manipulator in the past but has not had the evidence to back the claims, the sources said.
A withdrawal of the suspicions from public rhetoric may help to defuse some of the recent tensions between the two countries, who are currently locked in an escalating trade war.
China will remain on a currency manipulation watchlist, however, regardless of the outcome of next week’s report. Beijing’s large trade surplus with the US and illiberal trade practices are expected to be the topic of the report.