At Bloomberg Christopher Balding makes a pretty good case that the Chinese authorities are engaging in currency manipulation:
Theoretically, the yuan’s value is set against a basket of currencies compiled by the China Foreign Exchange Trade System, an arm of the central bank based in Shanghai. In practice, the CFETS RMB Index closely matches the U.S. dollar Index. When the dollar gauge rises, the greenback should strengthen against the yuan. Most of the time, this is what happens – except when it doesn’t.
From December 2017 until spring this year, daily changes in the dollar-yuan exchange rate closely matched movements in the dollar index. But beginning around April 1, Beijing started keeping the yuan above the value implied by that gauge. That state of affairs held until late June, when China’s currency nosedived.
In April through June, Chinese officials were negotiating to prevent U.S. President Donald Trump from imposing tariffs. It appears that China played nice by holding the yuan at an artificially strong level, only to switch tactics when officials became convinced that the talks would be unsuccessful – perhaps as a warning to Trump.
and that is currency manipulation and a violation of Chinese agreements under the WTO. Check out the graphs in the article. They’re pretty convincing.
