Trump Accuses China, EU of Currency Manipulation

(Bloomberg) — President Donald Trump accused China and the European Union of manipulating their currencies as he tries to wrestle concessions from two of the U.S.’s largest trade partners.

“I think China’s manipulating their currency, absolutely. And I think the euro is being manipulated also,” Trump said in an interview with Reuters published Monday.

The president’s accusation, presented without explanation or substantiation in the Reuters report, conflicts with the findings of his own administration. The Treasury Department stopped short of naming China, the EU or any other country as a currency manipulator in April, in a semi-annual report on foreign-exchange policy. The U.S. hasn’t officially accused another country of currency manipulation since 1994.

The dollar extended its drop to trade at the day’s low as measured by the Bloomberg Dollar Spot Index while the euro rose to its highest level in more than a week at $1.1481. The dollar was already under pressure after Bloomberg News reported earlier that Trump complained about interest rate hikes under Federal Reserve Chairman Jerome Powell.

In the April report, Treasury dialed up its criticism of China, citing lack of progress in rectifying its trade imbalance. The department said that China met two of the three criteria that would qualify it as a currency manipulator. A designation requires the U.S. to engage in expedited negotiations with the country.

China’s stock market has suffered declines and the yuan has been on a losing streak for more than a month. Chinese authorities, bracing for economic fallout, have introduced measures to support growth ranging from shifting toward a more accommodative monetary policy to boosting fiscal spending.

“There is little evidence of more than scant Chinese foreign exchange market intervention,” Mark Sobel, a former U.S. Treasury official who worked at the department for nearly four decades, wrote in a column published Monday by a London-based think tank. He cited a lack of evidence in China’s foreign reserve holdings data and other measures.