On Monday, August 5th, the U.S. Treasury Department labeled China as a “currency manipulator” according to the Treasury Department. And this was the first time that the U.S. has made such a claim against China since 1994, or 25 years ago.
Past Currency Manipulators
Since 1988, the U.S. has accused just three countries of weakening their domestic currency to gain a trading advantage. Japan was labeled a currency manipulator in 1988, Taiwan in 1988 and 1992, and China — 1992-1994.
According to BTN research, the Chinese government had manipulated its currency downward until 2005 in order to lower the cost of Chinese exports to foreign buyers, providing its exporters an advantage over their competitors. From July of 2005 to the end of 2013, the value of the Chinese currency had
increased in value as a result of global pressure by about 37% over the eight and a half years. Increasing from $12.08 to $16.05.
What did the United States do?
In retaliation to the U.S. government’s increased threat on tariffs on August 5th, the Chinese government pushed the value of their currency down from $16.05 to 14.16%, which is the lowest level in 11 years. This would be a negative for American exporters selling to China, but a positive for American consumers buying Chinese exports.
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