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US To Defer China Currency Manipulator Decision, No Further Escalation Expected

Tyler Durden's picture


As was expected in light of recent FX moderating overtures by Beijing, China will not find out if it is or is not a currency manipulator on April 15. The NYT reports that the decision from the Treasury will be deferred until after China President Hu Jintao visit Washington. "China experts said it was unlikely that China would have agreed to the
visit unless there was at least an informal assurance by the Treasury Department
that it would not be named a currency manipulator either on or around
April 15
— the deadline for the Obama administration to submit one of
its twice-a-year reports on foreign exchange to Congress." This does not mean that China will refloat the CNY, but that we are merely back to square one, after some loud TV appearances by politicians, and some even louder columns written recently by so-called pundits.

More from the NYT:

Economists say the visit, and other Chinese moves, suggest China is finally willing to let the renminbi increase in value. Analysts at HSBC, the Hong Kong-based global bank, declared that “the latest development should make it more likely for Beijing to start moving away from the renminbi’s current de facto peg within the next few months, if not weeks.”

Before the disclosure of Mr. Hu’s trip, Goldman Sachs said that China seemed increasingly likely to allow the renminbi to begin a modest appreciation in the next three months. Helen Qiao, the China economist for Goldman Sachs, and others who have spoken with officials in Beijing said that the currency issue appeared to be under active discussion there.

But what should be the value of the renminbi? Most Western economists agree that the currency is undervalued, meaning that it would be stronger if it were allowed to float freely in relation to other currencies. But that is about all the economists agree on. Some argue that the currency is undervalued by an astonishing 50 percent or more. Others contend it is about where it should be, economically speaking, saying the currency is undervalued by about 10 percent. Still others say the renminbi may actually be overvalued, because Beijing does not allow its people to trade it freely for other currencies.

The one problem with the Free Float idea, as was discussed by another Chinese administration official, is that floating the CNY would mean a more aggressive selling of US denominated assets, which would mean not just non-government backed corporates. In this time when every uptick of the market is based purely on excess liquidity, any incremental selling pressures, be they from China or the Fed, will be very carefully analyzed by the markets.


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Fri, 04/02/2010 - 11:42 | Link to Comment theworldisnotenough
theworldisnotenough's picture

Quid pro quo for sanctions against Iran?

Fri, 04/02/2010 - 15:36 | Link to Comment Crummy
Crummy's picture

About as likely as US sanctions against Saudi Arabia.


Sat, 04/03/2010 - 09:16 | Link to Comment Nikki
Nikki's picture

Correct. Yours is the only comment necessary to read.

Quid pro quo for Iran ... Bibi gets what he wants. Our 20 million unemployed can suck it.

Fri, 04/02/2010 - 11:45 | Link to Comment Assetman
Assetman's picture

Geez, and all I can think of is why can't I defer filling out my tax returns (and paying additional tax) after April 15.

Besides, Hi Jintao is in town...

Fri, 04/02/2010 - 11:47 | Link to Comment BorisTheBlade
BorisTheBlade's picture

'Currency manipulator' actually sounds quite sexy, I don't know why Chinese became so offended.

Fri, 04/02/2010 - 11:52 | Link to Comment Carl Spackler
Carl Spackler's picture


If the US Treasury is intentionally withholding information (even though a subjective data point) for an established time period about supposed "manipulators," then they are the actual manipulators.


Fri, 04/02/2010 - 12:47 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture


Every country manipulates their currency. To say otherwise is to say humans (and monkeys) don't masturbate.

Speaking of such, where is that troll Master Bates? I suspect he has assumed an alter ego here on ZH. Stealth masturbation. Does that mean I do it under the covers? :>)

Fri, 04/02/2010 - 13:07 | Link to Comment Carl Spackler
Carl Spackler's picture

No question, CG.

I'm just finding entertainment value, albeit cynicism, watching "the pot call the kettle 'black'."

Fri, 04/02/2010 - 14:46 | Link to Comment sheeple
sheeple's picture

takes one to know one

Fri, 04/02/2010 - 12:06 | Link to Comment Sqworl
Sqworl's picture

The political pressure on China will yield a fortune cookie!!

Fri, 04/02/2010 - 12:48 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Where have you been my friend? You're humor is unique and irreplaceable.

Fri, 04/02/2010 - 12:13 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

If you can, BUY GOLD COINS!  They come in various weights.  If you can not afford gold, BUY SILVER!  Make sure you have a water filtration system.  If you live in a city that fluoridates its water, MOVE, or find a store that filtrates it out.  BUY CANNED FOOD!  TOOTHPASTE/DENTAL FLOSS/DUCT TAPE/PLASTIC BAGS!  BUY SOME WINE!  LEARN TO BREW BEER!  WHATEVER MAKES YOU HAPPY, HAVE IT IN YOUR POSSESSION, OR BE ABLE TO PROVIDE FOR YOURSELF>  BUY SILVER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Fri, 04/02/2010 - 12:28 | Link to Comment pan-the-ist
pan-the-ist's picture

Do these work?  Do you need a more robust solution?

Fri, 04/02/2010 - 15:12 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

FIRST, my city does not fluoridate, so I am told (as of now I believe them, but if I get one inkling of any manipulation I will raise hell on earth!), and so I have not had to do fanatical research on the subject of 'fluoride filtration' to save my mind and body (FLUORIDE IS MORE DANGEROUS THAN WE CAN DISCUSS IN BRIEF!).  I will say that 'fluoride' is added to bottled water in many cases.  BOTTLED WATER IS MOST LIKELY NOT YOUR FRIEND.  Most of the time bottled water is tap water, no joke.  I use a chlorine/metal filtration system when I am not drinking well water.

Brief history on FLUORIDE:  Some years ago, industry was wondering why they had to dump their toxins, AND PAY A TAX ON IT (baby had a boobie).  At the same time, scientists found that towns with natural occurring 'fluoride' was healthy for a population (Eugene, Oregon was a case example).  In small doses, and naturally occurring, it is true; this just as many minerals are healthy for us when they occur naturally.  Industry said awesome!  We will rename our chems FLUORIDE, and SELL THEM TO CITIES!  They advertise it is to help tooth decay.  Right, because water running over teeth in a quick instance will solve the problem....BULLSHIT!  Plaque is the problem....FLOSS!  Anyway, this is the story in brief.

My friend, I am no expert on anything.  I know a little bit about a lot of things.  All I can tell you is question EVERYTHING you are told; seek questions, not answers, then the truth will be close at hand.  This; all we can ask for.  GOOD LUCK!

Fri, 04/02/2010 - 12:29 | Link to Comment pan-the-ist
pan-the-ist's picture

Sounds like the USA lost the current battle of WW3.  The Chinese (with or without NK) sunk the SK ship, and the US didn't say 'boo.'

We reinstated the 'one China' policy.

Now China is no longer a currency manipulator.  I wonder what else they will get in consession?

Fri, 04/02/2010 - 14:23 | Link to Comment faustian bargain
faustian bargain's picture

"I am told you Americans have these eating establishments called 'Hooters'. We will take all of them."

Fri, 04/02/2010 - 14:37 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture


Fri, 04/02/2010 - 14:29 | Link to Comment pan-the-ist
pan-the-ist's picture

I wonder what card they will need to play to get Tiawan?  They hold a Loyal Frush.

Fri, 04/02/2010 - 12:35 | Link to Comment Cindy6
Cindy6's picture

I bet all China agreed to was to increase the trading band, i.e. turning the hard peg into a soft one. Given its trade deficit, there's no immediate pressure to revalue, especially now Japan and EU have both gone softy softy on the RMB.

Fri, 04/02/2010 - 13:24 | Link to Comment Amish Hacker
Amish Hacker's picture

This sounds about right. The real upward move won't come until China experiences serious price inflation, when a stronger RMB will protect consumers' purchasing power. No sense punishing 1.3 billion diligent savers.

Fri, 04/02/2010 - 16:06 | Link to Comment bc0203
bc0203's picture

Yep.  That's pretty much what they're doing, widening the band within the RNB trades.  They can adjust the band as needed to avoid being labeled a manipulator and widen it as needed to address domestic concerns.

Fri, 04/02/2010 - 12:52 | Link to Comment mikla
mikla's picture

"Hey, China, you buy our bonds, and we'll stop asking you to revalue your currency."

Fri, 04/02/2010 - 13:31 | Link to Comment lizzy36
lizzy36's picture

ahhh..... the NYT's doing a masterful job. 

that pay wall is going to work great.

White House: no decision on China currency report WASHINGTON (Reuters) - The Obama administration has not decided to delay a report that could brand China a currency manipulator and Chinese President Hu Jintao's upcoming visit does not affect the issue, the White House said on Friday.

"There have not been any formal decisions made on reports," White House spokesman Robert Gibbs told reporters when asked about a delay.

Fri, 04/02/2010 - 15:17 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture


"ahhh..... the NYT's doing a masterful job. that pay wall is going to work great."

I find the whole idea that I will soon be asked to PAY for the official party line hilarious beyond belief. It's bad enough being showered with "free" propaganda everywhere I turn. But for me to click on a button and pay money (which is the ultimate representation of my conscious acceptance) for propaganda actually has me wondering if I might actually do so just for the chance to watch a few months of the Truman Show live and in real time.

April Fools NY Times.

Fri, 04/02/2010 - 13:34 | Link to Comment Comrade de Chaos
Comrade de Chaos's picture

I disagree. As the job stagnation continues and the current administration becomes unpopular, they will keep pushing that angle. In addition, there is a way of implementing the trade barriers in a smart manner - FDA regulations on related exports (not necessary a bad idea, given the tinted toys, etc) that will delay ability to use those materials for months, travel - visa entry restrictions on the Chinese citizens looking for deals in here, requirement that 75% of components for Gov contracts originated locally (that what Chinese often do), and similar. 

Fri, 04/02/2010 - 13:38 | Link to Comment chinaguy
chinaguy's picture

"but that we are merely back to square one, after some loud TV appearances by politicians, and some even louder columns written recently by so-called pundits"

China is currently experiencing moderate wage push inflation and large price increases in food stuffs. It's in their best interested to revalue the RMB a bit, regardless of what our yapping politicians bark for.

Hu shows up here, they revalue a token amount, to their benefit, Obama can claim victory & then the Chinese do whatever the F they wish in the coming months.

It is criminal to have these sightless incompetents negotiating for us when they are up against the Chinese.


Fri, 04/02/2010 - 14:27 | Link to Comment faustian bargain
faustian bargain's picture

They should send Hank Johnson in there to threaten to capsize Hong Kong.

Fri, 04/02/2010 - 13:40 | Link to Comment Rogerwilco
Rogerwilco's picture

What are Timmy and the clowns going to do about this movie?


It's still being edited, but from what I've read the Chinese are not going to be happy about the plot in this remake of the 1984 version.

Fri, 04/02/2010 - 13:55 | Link to Comment dot_bust
dot_bust's picture

If China allows the Yuan to appreciate in value, I'll be hungry an hour later.

Fri, 04/02/2010 - 14:29 | Link to Comment faustian bargain
faustian bargain's picture

I wonder if they put MSG in their gold.

Fri, 04/02/2010 - 16:25 | Link to Comment CombustibleAssets
CombustibleAssets's picture

Powdered tungsten is likely to be more difficult to identify than an embedded tungsten slug.

Fri, 04/02/2010 - 16:28 | Link to Comment dot_bust
dot_bust's picture

I'd bet on it. But I'd call it Moo Shu Gold.

Fri, 04/02/2010 - 14:05 | Link to Comment nector_collecter
nector_collecter's picture

If you look at what the Chinese  have done to the world and North American honey markets, i.e. price of bulk honey,you would discouver they are unbeatable at this trade game,they  win everytime every way.Heaven forbid they get dominate in anyother  industry........... they are killers ,google " transhipped chinese honey"

Fri, 04/02/2010 - 18:25 | Link to Comment seabiscuit
seabiscuit's picture

A spoonful of honey helps the melamine go down.

Sat, 04/03/2010 - 11:26 | Link to Comment tmosley
tmosley's picture

Indusrialism always wins.  Don't like it?  Blame our pols for driving out all of our industries with high taxes and regulation.

Fri, 04/02/2010 - 14:28 | Link to Comment sheeple
sheeple's picture

China: Half the lies they tell about me aren't true.

Fri, 04/02/2010 - 14:36 | Link to Comment Alitak
Alitak's picture

The US would have some nerve to accuse China of manipulation when Ben is busy doing the same with the Bond market, and the equity markets with the PPT. Also, JPM has been fraudulently playing the precious metal markets for years! Point a finger and three point back.

Fri, 04/02/2010 - 15:03 | Link to Comment Rick64
Rick64's picture

 The U.S. sucked the world into our MBS scam and wrapped them in a AA&AAA package and sold them. We manipulate Gold and Silver markets and do nothing about it. We create a financial system on a fantasy fiat system. There is no accountability anywhere. The hypocrisy has no end. It is a wonder that the whole world doesn't unite against us. This is not about currency manipulation its just one move in a chess game.

Fri, 04/02/2010 - 15:50 | Link to Comment AnAnonymous
AnAnonymous's picture

Unite against the US? Currently, word on the streets is more ganging up on China. That is what China wants to avert at present times as being labelled a currency manipulator could be the kick off whistle.

Fri, 04/02/2010 - 15:51 | Link to Comment waterdog
waterdog's picture

The Secret Service is not doing their job. On the days that Obama has to punish the Chinese, he wakes up in the morning without his balls. Someone is stealing them during the night.


Fri, 04/02/2010 - 16:01 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They are in a jar marked "MINE" at the Rockefeller Institute.  Have been since the lad entered Columbia under the tutelage of Zbigniew Brzezinski.  After this, Kissinger signed off on them while Barry was assigned by Kissinger Associates to run counter-intel for the CIA; in Pakistan, among other places.  Now David keeps private detail on them.  They are of the utmost importance!

Fri, 04/02/2010 - 15:55 | Link to Comment Blithering ORSA
Blithering ORSA's picture

Wouldn't Congress FIRE a Fed Chief who didn't attempt to manipulate the currency at least some to help them enact their economic policy? 

Fri, 04/02/2010 - 16:59 | Link to Comment CombustibleAssets
CombustibleAssets's picture

I doubt that the latest resident in the White house had much choice in this matter.

I wonder if Xie Xuren agreed to buy some more of our "Fencing Master's" Treasury bills?

Sat, 04/10/2010 - 10:46 | Link to Comment mark456
mark456's picture

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