US Committee Probes into Foreign Currency Manipulation of Korea, China, and Japan

The U.S. General Accounting Office (GAO), an investigative arm of Congress, is set to probe into whether China, Korea, Japan, and Taiwan intervened in the foreign currency market, a GAO official said. The move reflects fears of Congress that foreign currency policies of some eastern Asian countries have an adverse effect on the earnings and employment of the U.S. manufacturers.

“We have been asked to kick off investigation from Congress,” said a GAO analyst but refused to specify. The GAO probe is expected to end within 90 days.

The U.S House Small Business Committee requested the GAO on July 24 to investigate whether the four Asian countries hurt U.S manufacturers by exporting their goods at unfair prices. The investigative arm of Congress has conducted a probe into the manipulative devaluation of Korean and Taiwanese currencies in late 1980s.

House Small Business Committee Chairman Donald Manzullo, a Republican congressman from Illinois, said that the four countries account for 75 percent of U.S manufacturers` trade deficits. “Their foreign currency policies made the unemployment rate of a company in the Illinois state soar to 11.3 percent,” he claimed. Some Republican and Democratic congressmen called on U.S. President George W. Bush to pressure China to give up pegging the yuan to the dollar and introduce the floating exchange rate system.

“The stabilization of the yuan is good for the global economy as well as China itself,” said a Chinese senior official Tuesday in a meeting with former U.S. Secretary of Finance Robert Rubin and the management of the Citi Group, indicating that China has no intention of revaluation of the yuan.

The People`s Bank of China ruled out the possibilities of devaluation in the latter half of this year in its report Tuesday.