US government refrains from calling China a currency manipulator

China could bolster confidence in the yuan by engaging in more market-friendly reforms. (AFP)
Updated 18 October 2018

US government refrains from calling China a currency manipulator

  • The US Treasury Department said a recent depreciation of China’s yuan currency will likely exacerbate the US trade deficit
  • China is trying to counter some of the yuan depreciation

WASHINGTON: The US government on Wednesday refrained from naming China or any other trading partner as a currency manipulator, as it leans on import tariffs to try to cut a trade deficit with China.
In its semi-annual currency report, the US Treasury Department said a recent depreciation of China’s yuan currency will likely exacerbate the US trade deficit, but US officials found Beijing appeared to be doing little to directly intervene in the currency’s value.
US President Donald Trump has claimed that China’s rise as an exporting powerhouse has hurt US workers and since taking office he has ordered tariffs on more than $200 billion in Chinese imports.
“Of particular concern are China’s lack of currency transparency and the recent weakness in its currency,” said Treasury Secretary Steven Mnuchin.
Since the Treasury’s last currency report was issued on April 13, the yuan has fallen by more than 9.0 percent against the US dollar.
In the last week, the currency has pushed closer to the key 7 to the dollar threshold, a level not breached since 2008. Some currency derivatives show market participants expect the yuan to weaken past that level within a year.
The Treasury noted reports that China was trying to counter some of the yuan depreciation and said China could bolster confidence in the yuan by engaging in more market-friendly reforms.
“Treasury is deeply disappointed that China continues to refrain from disclosing its foreign exchange intervention,” the department said in its report.
It added that China should advance macroeconomic reforms that support greater household consumption growth and help rebalance the economy away from investment.
China’s multi-decade investment boom has helped make it the world’s factory and fueled a trade surplus in goods with the US of $390 billion in the 12 months through June.
Some China experts have speculated that Beijing could use yuan devaluation as a weapon in a broader trade war with the US.
The Treasury also said it was keeping China, India, Japan, Germany, South Korea and Switzerland on a monitoring list for extra scrutiny.
The Treasury said it was concerned that South Korea stepped up interventions in currency markets that appeared “to have been for the purpose of slowing won appreciation against the dollar.”
The Treasury said India was on course to be left off the list when it is next updated in six months. India was added in April after a burst in foreign exchange sales by the country’s central bank.


Oman said to mull new regional airline

Updated 22 October 2019

Oman said to mull new regional airline

DUBAI: Oman is considering setting up a new regional airline that could take over domestic operations from state carrier Oman Air, two sources familiar with the matter told Reuters.

A request for proposal was issued this month by state entity Oman Aviation Group for a feasibility study into operating the new airline, “Oman Link,” the sources said.

Setting up a new airline for domestic flights would allow Oman Air to focus on its international network where it competes with large Gulf carriers Emirates, Qatar Airways, and Etihad Airways.

The new airline could partner with Oman Air with both carriers connecting passengers to each other but would have its own independent management, the sources said on the condition of anonymity because the details are private.

Proposals are to be submitted by Nov. 11, one of the sources said.

The new airline would use regional jets for domestic flights and potentially later to other cities in the region where there is not enough demand to fill the larger single aisle jets used by other airlines in Oman.

FASTFACT

Oman Air operates flights to four airports in the country, including the main Muscat International.

Oman Aviation Group and its unit Oman Air did not respond to separate emailed requests for comment.

Oman Air operates flights to four airports in the country, including the main Muscat International, according to its website.

The airline uses 166-seat Boeing 737 jets and 71-seat Embraer E175 aircraft on domestic and regional flights.

Both aircraft types are too costly to consistently operate domestic routes at a profit, according to industry sources.

Oman has been restructuring its aviation sector in recent years. Oman Aviation Group was formed in 2018 and includes Oman Air, Oman Airports and Oman Aviation Services.

A budget, second airline, Salam Air, was launched in 2017. It is owned by Omani government pension funds and the Muscat municipality.

Last week, Eithad and Air Arabia said they were jointly setting up a low cost carrier in Abu Dhabi.