WASHINGTON — U.S. Treasury Secretary Steven Mnuchin on Tuesday called on the International Monetary Fund to provide “candid analysis” of exchange-rate policies in member countries. Mnuchin spoke by phone with IMF Managing Director Christine Lagarde in what was among the first contacts between the fund and the administration of President Donald Trump, who has repeatedly accused countries like China of using trade and currency policies to cheat its trading partners.
Trump also threatened during the election campaign to slap tariffs on imports from China and declare the country currency manipulator, which would set in motion a process that could allow the United States to take retaliatory action. Mnuchin in his conversation with Lagarde “underscored his expectation that the IMF provide frank and candid analysis of the exchange-rate policies of IMF member countries,” according to a Treasury readout of the call. The IMF does monitor currencies and other economic policies in the 189 member countries, and its rules dictate members must “avoid manipulating exchange rates… to gain an unfair competitive advantage over other members.”
However, in practice the fund can only exert real pressure to change policies on those countries that have IMF loan programs in place. Despite the Trump administration’s focus on China, charging it with keeping the renminbi artificially low to make its exports more competitive — a charge many economists agreed with up until a few years ago — Beijing in recent years has instead been working to keep the currency’s exchange rate from falling too low. In its last annual review of the Chinese economy, in August 2016, the IMF said the renminbi was “broadly in line with fundamentals.” But in 2015 it had appreciated by 10 percent and was “moderately stronger” than the state of its economy would dictate, contradicting the Trump administration view of an artificially weak currency. In a reference to another key focus of the Trump administration — trade deficits — Mnuchin told Lagarde he “looked forward to robust IMF economic policy advice on its member countries and tackling global imbalances,” given the importance Washington places on “boosting economic growth and jobs in the United States.” Asked to comment on the tone and content of the discussion with Mnuchin, IMF spokesman Gerry Rice said in a statement the conversation was “constructive” and covered “a wide range of issues of interest to our membership.”
“We look forward to continuing our close and productive engagement with the U.S. authorities.”