China and South Korea Should Curb FX Intervention, Says US Treasury
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- US Treasury FX Policy Report Calls for Pro-Growth Policy by Top Economies
- South Korea and China Urged to Curb Foreign Exchange Market Intervention
- Have Economic ReleasesDirectly on Your Charts with theDailyFX News App
The US Treasury issued its semiannual FX Policy Report to Congress. The document argued that global growth should not just rely on US economic performance alone and encouraged all countries to use the full breadth of available tools to boost overall output. Specific calls on “policy balance” were directed at China, Germany, Japan, and South Korea. In the Eurozone, Treasury officials said fiscal policy should be used to boost growth while Japan should secure a balanced recovery.
On the issue of manipulating FX rates, the report did not name any major trading partners as offenders. However, it did mention that South Korea and China should curb intervention. The Treasury also said that the Chinese Yuan should rise in the medium term and that Korea should allow the Won to move higher.
With the US dollar rising against major currencies, some Fed officials have openly worried that a strengthening US Dollar and weakening global economic uncertainties may delay the first post-QE interest rate hike. However, the markets continue to price in the likelihood that the US central bank will be the most hawkish compared with its G10 counterparts. Indeed, OIS rates reveal bets on 50 basis points in tightening over the next 12 months.
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