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The Treasury Department just released its May 2019 Macroeconomic and Foreign Exchange Policies of Major Trading Partners report to Congress.

The report concludes there are no countries meet the required currency manipulation criteria.

Three Criteria

  1. Significant bilateral trade surplus with the United States
  2. Material current account surplus
  3. Country engaged in persistent one-sided intervention in the foreign exchange market

No country met all three criteria. Only Singapore met condition 3, but it did not meet condition 1.

Country Evaluation

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Summary of Findings

  • Pursuant to the 2015 Act, Treasury finds that no major trading partner met all three criteria in the current reporting period based on the most recent available data.
  • Eight major trading partners met two of the three criteria for enhanced analysis.
  • One major trading partner, China, constitutes a disproportionate share of the overall U.S. trade deficit.
  • These nine economies – China, Japan, Korea, Germany, Italy, Ireland, Singapore, Malaysia, and Vietnam – constitute the Treasury’s Monitoring List.
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Question of the Day

How soon will Trump propose modifying the rules so he can claim China is a currency manipulator?

Even then, note that China fails test number 2. China's overall net balance of trade is primarily US-based.

For comparison purposes, look at Germany or Japan.

Leprechaun Economics

It's amusing to see Ireland on the watch list. It's an artificial abstract of tax avoidance policy.

What Country Isn't a Manipulator?

If you count the Fed, ECB, Bank of China, Bank of Japan, etc., interest rate manipulations, it's easy to arrive at the correct conclusion: Every Country is a Currency Manipulator.

Mike "Mish" Shedlock