(Adds comment by senior U.S. Treasury official on exchange rate communications)
WASHINGTON, June 1 (Reuters) - The U.S. Treasury will press China in bilateral meetings next week to keep moving toward a market-determined exchange rate, reduce excess industrial capacity, and make reforms that boost domestic consumption, a senior Treasury official said on Wednesday.
The official, speaking to reporters ahead of Treasury Secretary Jack Lew’s trip to Beijing for the annual U.S.-China Strategic and Economic Dialogue meetings on June 6-7, said a “hallmark” for China to achieve a market-determined exchange rate would be “two-sided flexibility” that allows the yuan to both appreciate and depreciate in response to market pressures.
China’s yuan has slid in recent weeks to near five-year lows against the dollar amid weak factory data and market expectations that the Federal Reserve is preparing to raise interest rates in June or July.
The Treasury official said that it was also for important for China to continue to communicate clearly its intentions for exchange rate policies.
“That communication is a core part of an effective exchange rate regime,” the official said.
After a yuan drop in January roiled global markets, China’s top central banker had calmed investors by saying the government had no intention to devalue the yuan. (Reporting by David Lawder; Editing by Chizu Nomiyama and Matthew Lewis)
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