In its semi-annual report to Congress on international economic and exchange rate policies, the Department of the Treasury said many major emerging market economies,especially in Asia, are exercising tighter management of exchange rates but there is a "need for greater exchange rate flexibility and transparency in these economies, most notably in China."
The report concluded that, as of early April, China's efforts at currency appreciation and "a more market determined exchange rate," since Beijing moved off its exchange rate peg in 2010, have resulted in a 10.0 percent appreciation of the renminbi against the U.S. dollar.
"In real terms, after adjusting for relative changes in domestic prices, the RMB appreciated by 16.2 percent from June 2010 through February 2013," the report said.
"China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime."
The report concluded the standard under U.S. law regarding rate of exchange manipulation "for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade during the period covered in this report has not been met with respect to China."
However, the report also concluded the renminbi remains "significantly undervalued" and said "further appreciation of the (renminbi) against the dollar is warranted."
The report said the department will monitor exchange rates in the economies covered by the study.
"Treasury will closely monitor Japan's policies and the extent to which they support the growth of domestic demand," the report said. "In addition, Treasury will pay particular attention to the pace of (renminbi) appreciation, and press for further policy changes that yield greater exchange rate flexibility, improve transparency, level the playing field for American workers and businesses, and support a strong, sustainable, and balanced global economy."