US voices concern over depreciation of Chinese yuan

The United States, long concerned about China's monetary policy, has warned Beijing that the recent depreciation of the Chinese currency could raise "serious concerns" if it signalled a shift away from allowing market-determined exchange rates.

Washington has been pressing China for years to allow its currency to trade at stronger values. A weak yuan makes Chinese exports cheaper for US consumers at the expense of US producers. A weaker yuan also makes Chinese consumers less able to buy foreign goods.

Last month, US Treasury Secretary Jack Lew welcomed a decision by China to allow its currency to vary more against the dollar in daily trading.

Monday's comments by a senior official from the Treasury Department suggested the United States was not completely convinced about China's intention to reduce authorities' interventions in exchange markets.

"If the recent currency weakness signals a change in China's policy away from allowing adjustment and moving toward a market-determined exchange rate, that would raise serious concerns," the official, who asked not to be named, told journalists in a phone call.

In comments that outlined US positions before meetings later this week of the International Monetary Fund and the Group of 20 nations, the official noted the widening of China's currency trading band came just after a drop in the yuan's value that coincided with reports of "considerable intervention" in exchange markets by Chinese authorities.

That is exactly the sort of behaviour Washington wants Beijing to ditch, according to a Reuters commentator.

The United States also appears likely to pressure Europe at the meetings to act more decisively to fix its troubled banking sector, the Reuters report says.