China views yuan depreciation not in its interest: Mnuchin

NUSA DUA, Indonesia (Reuters) – U.S. Treasury Secretary Steven Mnuchin on Saturday said Chinese officials told him this week that a further depreciation of China’s yuan currency was not in the country’s interest.

Mnuchin also told a news conference he was “not losing any sleep” over the prospect that China could sell U.S. Treasury debt amid rising trade tension between the world’s two largest economies.

“We had productive conversations, and they emphasized to me that it is not in their interest to see the RMB to continue to depreciate,” Mnuchin said at the International Monetary Fund and World Bank annual meetings in Bali.

“And as I’ve said, the currency issue is an important issue for us in trade and will be part of our trade discussions. We want to make sure that depreciation is not being used for competitive purposes in trade.”

The comments come after Mnuchin expressed concern about a weakening of the yuan against the dollar to near levels not seen in a decade, as the Treasury prepares to release a much-anticipated report next week on currency manipulation.

Mnuchin said no decision had been made whether U.S. President Donald Trump would meet Chinese President Xi Jinping at the G20 leaders summit in Argentina at the end of November. No formal talks to try to resolve the U.S.-China trade dispute have taken place since Aug. 23.

“To the extent that we can make progress toward a meeting, I would encourage that, and that’s something that we’re having discussions about. For the moment, there’s no preconditions, the president will decide on that.”

Mnuchin said he was not concerned that China’s holdings of $1.17 trillion could be sold amid trade tension.

“The Treasury market is very liquid. This has never come up in any of our discussions whatsoever. I hope they think it’s good to hold U.S. assets and U.S. dollars and U.S. Treasuries.”

Mnuchin also reiterated his support for an independent Federal Reserve, despite President Trump’s persistent criticism of Fed rate hikes.

He said he would not comment on Fed policy, but added that it was Trump’s “prerogative” to express his views on U.S. interest rates.

“The president has made clear that he’d like lower rates, as opposed to higher rates, and that he’s concerned that if the Fed raises rates too quickly, that could have an impact our growth,” Mnuchin said, adding that he saw no inconsistencies between his views and those of the president.