FX Comment: US Treasury FX Report: No "Currency Manipulators" and a More Constructive Tone

Research evidence excerpt

FX Comment: US Treasury FX Report: No "Currency Manipulators" and a More Constructive Tone

Goldman Sachs FX Comment

this report reiterated previous language stating that China’s relative lack of transparency

will not prevent Treasury from identifying China as a manipulator despite the limitations

of existing proxy measures and again took note of “large-scale non-market support for

domestic manufacturing.” Overall, we read the Treasury’s assessment as moderately

more constructive, including by acknowledging recent measures to allow RMB

appreciation, while still encouraging authorities to go further.

4. The Dollar’s depreciation over 2025 helped contribute to a more constructive tone

throughout the report as Treasury acknowledged that many major trading partners had

allowed their currencies to appreciate and FX reserve accumulation was limited. The

report also softened its previous assessment that particular countries were maintaining

either “excessively tight fiscal policies” or “holding back consumption” in ways that were

preventing global economic adjustments. That said, the Treasury remains focused on

“large and persistent” global and bilateral imbalances.

5. This report did not include the Annex on Transparency of Foreign Exchange Policies

and Practices found in the January report. In theory, increased transparency through

regular disclosures could discourage FX intervention given commitments to avoid

currency manipulation. That said, we have found limited evidence of this in historical

episodes where authorities reaffirm existing commitments or provide additional

transparency.

6. As a reminder, this Treasury report satisfies the requirements of two separate but

related pieces of legislation. The 2015 Act sets three specific criteria for Treasury to