Yuan stabilizes as Trump calls China a ‘currency manipulator’

President Donald Trump is slick.

He got the Federal Reserve to cut interest rates, giving him a stimulus tool to keep the economy going heading into an election year.

He then used this leeway to slap new tariffs on $300 billion in Chinese imports, applying pressure on the world’s second-largest economy and sending the yuan crashing.

He is then using two instances to get the central bank to slash rates even further.

With the yuan cratering below the crucial seven threshold against the United States dollar, the president is noting that this is proof Beijing is a currency manipulator.

This guy is the greatest 4D chess player or he is stumbling into these mishaps.

So, is China a currency manipulator or not? Well, like every central bank around the world, it does implement monetary policies that impact the yuan. The Federal Reserve, while not officially targeting exchange rates, institutes measures that increase or decrease the greenback’s value.

Previously, China pledged that it would intervene to prevent the yuan from slipping below seven. Well, it happened but China did nothing. Now, there are is a possibility of tremendous capital outflows, a trend already occurring thanks to the trade war.

Trump has already gone on Twitter and called China a currency manipulator, despite the Treasury Department refusing to label the country one. But former Treasury Secretary Larry Summers says there is not “much justification” for the label:

“When you are propping up your currency, not running a trade surplus, you’re not manipulating the currency on any definition that is understood and accepted in the financial community.”

He is, surprisingly, right. But Trump suggested during the campaign trail that China had debased the yuan, even though it was increasing at the time.

At the time of this writing, the yuan has stabilized as the USD/CNY currency pair tumbled 0.34 percent to 7.0264, from an opening of 7.0507.

So, how could the People’s Bank of China (PBOC) be manipulating the yuan to reduce its value but then stabilize nearly a week after the announcement of new tariffs.