WASHINGTON, Aug. 9 (Xinhua) -- China's real effective exchange rate (REER) in 2018 is estimated to be at the same level as warranted by fundamentals and desirable policies, the International Monetary Fund (IMF) reiterated on Friday in a newly released report.
The average REER in 2018 appreciated by about 1.4 percent relative to 2017, driven by the appreciation in the nominal effective exchange rate (NEER) (1.5 percent), the IMF said in a staff report after concluding the annual Article IV consultation to review the Chinese economy.
China's current account surplus fell by around 1 percentage point to 0.4 percent of gross domestic product (GDP) in 2018 and it is projected to remain contained at 0.5 percent of GDP in 2019, the report noted.
"The external position in 2018 was assessed to be broadly in line with the level consistent with medium-term fundamentals and desirable policies," the IMF said, consistent with its earlier conclusion in its annual External Sector Report released in July.
"The IMF report makes clear that there has been absolutely no currency manipulation and that China's external balance has been appropriate," Jeffrey Sachs, a senior United Nations advisor and renowned economics professor at Columbia University, told Xinhua via email.
In response to the IMF estimates through May 2019 which show the REER has depreciated by about 0.2 percent relative to the 2018 average, Sachs said the unilateral tariff action by the United States "surely has caused some depreciation" of the equilibrium REER.
"The U.S. Treasury action declaring China a currency manipulator was blatantly arbitrary, capricious and political, based on Trump's tweets rather than on objective analysis," Sachs said.