U.S. mutes criticism of China’s currency policy

The U.S. Treasury backed away Monday from its longstanding criticism that China’s currency was much weaker that it would be if it was allowed to trade freely on foreign-exchange markets, a sign that it’s giving the country more space to revive its struggling economy.

In its semi-annual report on exchange rates, Treasury dropped its prior assertion that China’s currency is “significantly undervalued.”

The administration said the near-term trajectory of China’s currency is “difficult to assess” given economic uncertainties, volatile capital flows and prospects for slower growth” in the country.

China’s currency USDCNY, -0.0047%  has depreciated 2.3% against the dollar through September after the country’s surprise announcement in mid-August that it was altering how it set its daily reference rate.

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