WASHINGTON - The U.S. Treasury said Tuesday that China cannot be ruled a manipulator of its currency despite the yuan's sharp slide since January.
But the Treasury said the recent fall could "raise particularly serious concerns" if it represents a reversal in Beijing's commitment to a more free-floating yuan.
In a twice-yearly report to Congress that would set sanctions on any country officially branded a "manipulator," the Treasury said the yuan, or renminbi, "remains significantly undervalued" and that market pressures suggest it could easily move upward if trade in it were more free.
"China has continued large-scale purchases of foreign exchange in the first quarter of this year, despite having accumulated $3.8 trillion in reserves, which are excessive by any measure. This suggests continued actions to impede market determination," the report said.
The Treasury also singled out South Korea for criticism over its heavy intervention on behalf of the won and the country's dependence on exports.
Although Seoul has not published any data on its management of the won, "during the second half of 2013 the Korean authorities are believed to have intervened to limit the pace of won appreciation."
"Korean authorities should limit foreign exchange intervention to the exceptional circumstances of disorderly market conditions and increase the transparency of their interventions in foreign exchange," the Treasury said.
Copyright Agence France-Presse, 2014
