Yuan Strengthens With Yellen Decision Not to Label China on FX

The offshore yuan notched its first gain in four days on Monday after a report that U.S. Treasury Secretary Janet Yellen will refrain from naming China a currency manipulator.

The offshore yuan advanced around 0.2% to 6.5480 per dollar, and at one point strengthened to 6.5461. It remains around 0.7% weaker so far in 2021.

Yuan Strengthens With Yellen Decision Not to Label China on FX

The currency touched its intraday peak after people familiar with the matter confirmed that the Treasury’s upcoming semi-annual foreign-exchange report -- which has not yet been finalized and is the first of Yellen’s tenure -- won’t label China a manipulator.

The new U.S. administration is currently in the process of re-evaluating America’s relationship with China more broadly. The move by the Treasury Department is likely to do little on its own to budge the U.S.-China relationship, analysts suggested, but it does at least does not represent a further deterioration amid an increase in geopolitical and trade tensions.

During the Trump era, the Treasury Department was accused of politicizing the FX report after it abruptly designated China a manipulator in mid-2019 outside its usual release schedule, only to lift the label five months later to win concessions in a trade deal.

©2021 Bloomberg L.P.

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