The US Treasury has said China should "no longer be designated a currency manipulator at this time" as the two countries prepare to sign a 'phase one' trade deal this week.
China was labelled a currency manipulator in August last year, when US President Donald Trump said the country had allowed the Chinese renminbi (RMB) to devalue.
In a report published yesterday (13 January), the US Treasury department stated that after depreciating as far as RMB7.18 per US dollar in early September, the renminbi appreciated in October and "is currently trading at about RMB6.93 per dollar".
In the report, the US Treasury stated: "Since August, Treasury has held negotiations with the PBOC over currency issues to eliminate the unfair competitive advantage created by China's latest actions."
US Treasury Secretary Steven Mnuchin said: "The Treasury Department has helped secure a significant Phase One agreement with China that will lead to greater economic growth and opportunity for American workers and businesses.
"China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability."
Chinese equities were initially buoyed by the news, but the CSI 300 index is now down 0.3% to 4,189.89, while the Hang Seng index is 0.5% lower at 28,817.47.