Donald Trump has stated China has given itself a “tremendous competitive advantage” by weakening its currency, and the playing field needs to be leveled.
During a telephone interview with CNBC Trump said “the ability of Chinese president Xi to directly impact monetary policy is an unfair advantage. Trump made the comments as the Chinese yuan near its low of the year against the U.S. dollar.
“We should be entitled to have a fair playing field… because our Fed is very, very disruptive to us,” he said. Even without a fair playing field, we’re winning because the tariffs are putting us at a tremendous competitive advantage.”
Trump said the U.S. decided not to call China a currency manipulator, but he added there are some who say China has offset its tariffs by letting the currency fall.
“Don’t forget, the head of the Fed in China is President Xi. He’s the president of China… He can do whatever he wants. They devalue, loosen or you would just say they pump a lot of money into China, it nullifies to an extent, not fully, it nullifies the tariffs,” Trump said.
On Monday, The Chinese Yuan was near its low of the year, edging closer to 7 to the American dollar. That level has become a fine line for markets around the world, and if broken, some strategists say it could trigger a negative reaction in risk markets globally.
Donald Trump did mention that China is disadvantaged by the cheaper currency on the global market when it buys things like oil.
Marc Chandler, Bannockburn Global Forex chief market strategist has said “I think the Chinese seem to be accepting a weaker RMB but they’re not causing it,”. The Chinese Yuan is also known as Renminbi or RMB.