International Monetary Fund Current Affairs - 2020

United States designates China a ‘Currency Manipulator’

United States has designated China a “currency manipulator”, after country’s central bank allowed Yuan (Chinese Currency) to fall against dollar. This move could escalate tense trade relations between two nations.

Key Highlights

Background

During US Presidential elections in 2016, US President Donald Trump had promised to label China as a currency manipulator, but it was on hold until now as US Department of Treasury kept country on its watch list, declining to take any step. But now US Treasury Department has announced and determined that China is a ‘Currency Manipulator’.

US Aruguments:

US accused China of manipulating its currency to gain unfair competitive advantage in international trade and that China still targets on continuing to receive hundreds of billions of dollars which it have been taking from US with unfair trade practices and currency manipulation.

Further US treasury department also alleged that China has a long history of facilitating an undervalued currency through sustained, large-scale intervention in FOREX market.

The Trigger: This recent action by US to designate China as a ‘Currency Manipulator’ came after China allowed its yuan to weaken past key 7-per-dollar level for the 1st time in more than a decade.

China Arguments:

As per Central Bank of China depreciation in its currency was due to effects of unilateralist and trade-protectionist measures and expectations for tariffs against China.

Way Ahead: US will now engage with International Monetary Fund (IMF) to eliminate unfair competitive advantage created by China’s latest actions. This move could further escalate tense trade relations between two nations.

IMF Chief Christine Lagarde to now head European Central Bank

International Monetary Fund (IMF) Managing Director Christine Lagarde has been confirmed as new head of European Central bank (ECB). Her appointment would make her 1st woman to lead powerful institution of ECB.

Key Highlights

Following Lagarde’s nomination as President of ECB she announced to temporarily relinquish her responsibilities as head of IMF. She will now step down 2 years before end of her second five-year term as IMF Chief.

She would be succeeding Mario Draghi, whose term ends on 31 October 2019.

About Christine Lagarde

The 63 years old French, was the 1st woman to head International Monetary Fund (IMF) when she took the job in 2011.

In 2005 she was appointed France’s trade minister and in 2007 as finance minister.

She will next head European Central Bank starting November 2019.

About European Central Bank

It was established on 1 June 1998 with Headquarters in Ostend district, Frankfurt, Germany. It is the central bank of 19 European Union (EU) countries which have adopted Euro.

It is EU’s one truly federal institution which is responsible for administering of Euro and Monetary policy of Eurozone. It is one of the largest monetary areas in world.

After U.S. Federal Reserve, ECB is most influential central bank in world.

Mandate: To maintain price stability in Euro area and so preserve purchasing power of single currency.

ECB Presidency:

It is not just most powerful position in Europe, far more significant than European commission presidency but is one of the most significant policymaking positions in world.

The position is currently held by Mario Draghi, who was widely credited with saving the euro during the eurozone debt crisis.