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Trump Administration Refrains From Tagging Any Country 'Currency Manipulator'

No major trading partner of the United States was named a currency manipulator in a latest Treasury report on the foreign exchange policies of these countries, though a list including six countries whose polices were deemed to require close monitoring was left unchanged.

In its semiannual report to Congress, released on Friday, the Treasury department said no major trading partner met all three criteria, which would earn them the label of a currency manipulator, for the current reporting period.

The three criteria include a significant bilateral trade surplus with the U.S. of at least $20 billion and a material current account surplus which is at least 3 percent of GDP. The third condition is that a persistent, one-sided intervention occurs when net purchases of foreign currency are conducted repeatedly and total at least 2 percent of an economy's GDP over a 12 month period.

US President Donald Trump had repeatedly accused China of indulging in currency manipulation to boost exports. He has toned down his rhetoric as the Chinese government aggressively tries to strengthen the yuan and promote the currency's acceptance internationally.

Friendly relations with China is also crucial as Trump tries to tackle the troublesome North Korea.

That said, China remained on a "Monitoring List" of major trading partners that merit close attention to their currency practices.

Other countries on the list are Japan, Korea, Taiwan, Germany, and Switzerland. The list was unchanged from the previous report in October.

"China will need to demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift by letting the
RMB [renminbi] rise with market forces once appreciation pressures resume," the report said.

"Treasury places significant importance on China adhering to its G-20 commitments to refrain from engaging in competitive devaluation and not to target China's exchange rate for competitive purposes."

Further, the report said that greater transparency of China's exchange rate and reserve management operations and goals was of extreme importance.

Trump has also been very vocal regarding his displeasure of Germany's huge trade surplus, the largest in the world.

The report urged Germany to take policy steps - particularly greater use of fiscal policy - to encourage stronger domestic demand growth, which would place upward pressure on the euro's nominal and real effective exchange rates and help reduce its large external imbalances.

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