The U.S. Treasury has released its much delayed exchange rate report to Congress, in which it said the yuan is undervalued. However, it stopped short of labelling China as a currency manipulator.
The semi-annual report, which was originally due for release in April, had been delayed to give China more time to reform its exchange rate regime. Chinese authorities have prevented the yuan from strengthening against the dollar since July 2008 to help exporters cope with the global financial downturn. The currency had appreciated 21% in the three years after a peg to the U.S. dollar was scrapped in July 2005 and replaced by a managed float against a basket of currencies including the euro.
Last month, the Chinese government said it would loosen its exchange rate regime, although it ruled out a large one-off revaluation. The yuan has gained around 0.7% against the dollar since then.
U.S. Treasury Secretary Tim Geithner welcomed the move but said he will continue to keep an eye on the yuan, which is also called the renminbi. "What matters is how far and how fast the renminbi appreciates," he said in a statement accompanying the report. "We will closely and regularly monitor the appreciation of the renminbi and will continue to work towards expanded U.S. export opportunities in China that support employment in the United States, in close consultation with Congress."
The Treasury report urged China to let its currency move more freely, saying that it would help China's economy towards domestic demand-led growth and expand its ability to set an appropriate monetary policy. "As China's recovery strengthens, moving further to a more flexible, market-determined exchange rate would give monetary authorities greater scope to maintain price stability," it said.
The U.S., along with other trading partners, have long criticized that the Chinese government deliberately undervalues its currency in order to boost exports. An undervalued currency means that China's exports are cheap in foreign markets, while making imports more expensive.
U.S. lawmakers had urged President Barack Obama's administration to label China as a currency manipulator, saying cheap Chinese exports unfairly undermine the ability of domestic companies to compete. But blatatantly branding China as a currency manipulator would heighten trade tensions further between the two nations.
On Thursday, China's central bank reiterated its stance with regards to exchange rate policy, saying that it would steadily improve the yuan exchange rate mechanism. China's foreign exchange regulator also said that it will keep the exchange rate of its currency, the yuan, "basically stable" with conditions not right for a large appreciation.
The State Administration of Foreign Exchange said that expectations for a rise in the value of the yuan had been cooling as shown by the easing of foreign currency inflow pressures. "We will apply dynamic management and adjustments to the floating range of the renminbi's exchange rate, maintaining its basic stability at a reasonable and balanced level, and promote basic balance in international payments," SAFE said in a Q&A statement on its website.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.