FX comment: On China and currency manipulation
Despite the posturing of some US congressmen it was no surprise that talk of China being labelled as a currency manipulator was premature.
In fact it appears to have been some form of ritualized line-dance featuring Obama and Geithner on one side facing Hu and Wang on the other. Treasury secretary Timothy Geithner predictably delayed the report on exchange rate policies that had been scheduled for April 15 and flew off for a Do-si-do with vice-premier Wang. Also in attendance was the US Treasury’s economic and financial emissary to China, David Dollar (yes, really).
No reference to currency was made in the brief statement that followed the Geithner-Wang meeting. It seems unlikely that Geithner will be able to delay his report to Congress until the second US-China Strategic and Economic Dialogue, which convenes late next month. With President Hu visiting Washington in the middle of next week the New York Times wondered if there was a chance of some sort of move before then. Perhaps – though that would make the delay to Geithner’s report less logical. The failure of last night’s Chinese bill auction adds further complexity.
Finally, talking of pegged currencies, it looks like CHF got pegged to the EUR last week and nobody told us