Trump criticizes China and EU for 'currency manipulation'

US President Donald Trump on July 3 accused China and the European Union (EU) of currency manipulation, and implied that the US Federal Reserve (Fed) should also loosen monetary policy in the same way.

According to President Trump, China and the EU are "playing the currency manipulation game" and asserted that the US should take countermeasures while continuing to pressure both to increase purchases of American goods.

President Trump did not directly mention the Fed, the agency responsible for controlling US monetary policy, but he has consistently criticized the Fed for not supporting trade negotiations.

"China and the EU are playing the currency manipulation game and flooding their system with money to compete with the U.S. We must respond or we will continue to be the fools sitting back and watching other countries continue their game. They have been doing this for many years," Trump wrote on Twitter.

Despite Mr Trump’s claims, the US Treasury has refused to label China and the EU as “manipulators”, based on annual reports on foreign currency policies issued since 2017.

Mr Trump's tweet came just hours after the Commerce Department released data showing a jump in the US trade deficit in May 2019 amid President Trump's efforts to narrow the gap.

The US leader also expressed displeasure in recent weeks when European Central Bank President Mario Draghi announced last month that the bank would cut interest rates if the European economy continued to slow.

Mr Trump has claimed that the Chinese central bank and the European Central Bank have cut interest rates to lower the prices of US exports, and has called on the Fed to do the same. Mr Trump has criticized the Fed throughout 2018 for raising interest rates, a move that has boosted the value of the dollar.

Mr. Trump wants the Fed to weaken the dollar through interest rate cuts and monetary stimulus packages because a weak dollar will make American products cheaper compared to foreign goods.

Fed Chairman Jerome Powell, a strong opponent of Mr. Trump's views, affirmed that: "The Treasury is the agency responsible for exchange rate policy. We do not adjust the strength or weakness of the USD. We only control the domestic economy and financial conditions like other central banks"./.