The US government has announced that China is listed as a currency manipulator. The decision of the US government has caused many people to criticize. The former Treasury Secretary Summers accepted the interview with Bloomberg and pointed out that the decision to list China as a currency manipulator is a mistake. He also pointed out that if the US intervenes in the foreign exchange market, it will lower the dollar against the renminbi. I am afraid it will damage the credibility of the United States.
He pointed out that the Ministry of Finance did not think that the Treasury would buy the renminbi to intervene in the exchange rate without the support of the Fed, and that it would cause “abnormal quality of betrayal of the Ministry of Finance.”
He further pointed out that the intervention of the Federal Reserve with the support of the Federal Reserve has caused great damage to the US currency’s credit. Without the support of the Fed, the relevant actions are simply ineffective. But for the Trump administration, market players must learn to never say impossible, but if the authorities finally take action, they will still be surprised.
Summers’s statement that China’s listing of the country as a manipulator is unreasonable and may lead to a loss of control over the trade war with China. It also points out that the Chinese government has been preventing the devaluation of the renminbi, rather than suppressing the exchange rate.