U.S. President Donald Trump’s Twitter post on currencies in China and Russia was a warning to those countries against devaluing their currencies, Treasury Secretary Steve Mnuchin said on Tuesday in an interview with CNBC.
Trump accused Russia and China on Monday of devaluing their currencies while the United States raises interest rates, prompting China to accuse the United States of sending confusing messages.
“It was a warning shot at China and Russia about devaluation. China has devalued their currency in the past,” Mnuchin said on CNBC.
"They've used a lot of their reserves to actually support the currency. The president wants to make sure they don't change their plans, and he's watching it."
He said the Twitter post was not related to Trump’s view on the strength of the dollar.
For his part, Trump said in a Twitter post Monday that "Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!"
Speaking in Beijing on Tuesday, Foreign Ministry spokeswoman Hua Chunying noted that what Trump said seemed to contradict the U.S. Treasury's report that refrained from naming any major trading partners as currency manipulators.
"So it seems like the information being released by the U.S. side is a bit chaotic," she told a daily news briefing.
Hua said it reminded her of a poem by the founder of modern China, Mao Zedong, about remaining calm in the midst of chaos.
"No matter what others say we will continue to steadily promote the reform of the renminbi exchange rate mechanism," she added, without elaborating, using the currency's formal name.
Trump's tweet referred to what he sees as unfair trading advantages: If a country's currency is artificially low, its exports are more competitive. Higher U.S. interest rates would generally increase the value of the dollar, making U.S. exports more expensive.
Since Trump took office in January 2017, the dollar has weakened substantially against most currencies, including the Chinese yuan and, until the United States imposed sanctions on Russia in the last few weeks, the ruble.
Against the yuan, the dollar has fallen by 8.6 percent since Jan. 20, 2017, while it has appreciated 4.5 percent against the ruble.
Until the United States announced sanctions on Russian oligarchs this month, however, the dollar had weakened by nearly 4 percent against the Russian currency.
That gain was entirely erased by a two-day drop of 8.4 percent in the ruble on April 9 and 10.
More widely, the U.S. dollar index, which measures the greenback’s value against a basket of major trading partner currencies, has declined by 11.2 percent since Trump became president.
The U.S. Treasury, in a semiannual report on Friday, again refrained from naming any major trading partners as currency manipulators. The report came as the Trump administration pursues potential tariffs, negotiations and other restrictions to try to cut a massive trade deficit with China.
The report did not mention Trump’s recent threats to impose billions of dollars worth of tariffs on Chinese goods over Beijing’s intellectual property practices, or pending Treasury restrictions on Chinese investment in the United States.
White House spokeswoman Sarah Sanders later told reporters aboard Air Force One on a trip by the president to Miami that China is on a U.S. Treasury Department watch list for being potentially labeled a currency manipulator.
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