Washington's abrupt declaration Monday that China is no longer a currency cheat — two days before the signing of a trade deal with Beijing — shows how U.S. President Donald Trump has turned a routine technical report on foreign exchange into a political cudgel.
"It's absolutely being used as a bargaining tool," said John Doyle, a foreign currency strategist at Tempus Inc. in Washington. "We will look at that report now and wonder: Who are they going to flip on next if its politically convenient to get a deal done?"
The U.S. Treasury Department's semiannual report has long offered markets crucial signals about U.S. policy toward countries it deems to be manipulating their currencies. Using the report for other means — such as leverage to finalize a trade deal — risks undermining the weight of the designation if markets start to take it less seriously.
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