US institutions will keep Trump’s currency war at bay, but for how long? | East Asia Forum

US institutions will keep Trump’s currency war at bay, but for how long? | East Asia Forum: Author: Adam Triggs, ANU ‘China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices’ tweeted the President of the United States. ‘Not anymore!’ Mr Trump’s assertions on currencies range from overblown to completely baseless. But this has not stopped his actions likely to endanger the US and global economies. US authorities labelled China a currency manipulator on 5 August 2019 for the first time in 25 years after the RMB fell below the 7 RMB-per-dollar level. This was despite China’s actions failing to satisfy the US Treasury’s own definition of a currency manipulator. While US institutions may keep President Trump in check in the near term, this represents a dangerous escalation in tensions and a serious challenge to financial markets, US institutions and the rules-based system. An undervalued exchange rate makes a country’s exports cheaper than they otherwise would be compared to those