US Declares China a 'Currency Manipulator' while Bitcoin Sees Growth
Sarah Tran Aug 06, 2019 07:00
The US Treasury Department officially designated China as a “currency manipulator” on Monday following the largest stock market losses the U.S has seen in 2019.
The US Declares China a 'Currency Manipulator'
The US Treasury Department officially designated China as a “currency manipulator” on Monday following the most significant stock market losses the US has seen in 2019. There was a 2.9% plunge overnight in the Dow Jones Industrial Average, Nasdaq down 3.4% while Bitcoin is up 3.2% as tweeted by Tim Draper.
In a Tweet posted by Donald Trump, he mentioned that China deliberately weakened the Yuan to “steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices.”
China allowed the Yuan to sink below 7 to the US dollar, to its lowest level in 11 years to retaliate for US threats of new tariffs on Chinese products. Beijing announced that it would suspend purchases of US agricultural goods.
No country has been officially named a “currency manipulator” by the US since 1994 by Bill Clinton towards China. Under the law established in 1998, the Treasury Department must name any countries that it finds to be using their legal tender to gain trading advantages over the US.
Bitcoin’s Growth Is Due to an Inflow of Chinese Capital
CEO of Circle Jeremy Allaire suggested that this growth was due to an inflow of Chinese capital, given the correlation between Bitcoin’s gains and the sinking of the Yuan. Although Bitcoin is not easily accessible in China, many investors go through offshore firms to make purchases.
Chart showing BTC/RMB, Bitcoin's surge after Trump's announcement. Chart via CoinGecko
China banned all crypto-related activities in 2017 as there was a wave of initial coin offerings. Recently, China has been softening its stance on cryptocurrencies, as it was announced in a court in Hangzhou that Bitcoin is virtual property.
Image via Shutterstock
