The US government determined that China is manipulating its currency.

The US will engage with the International Monetary Fund to eliminate unfair competition from Beijing, Treasury Secretary Steven Mnuchin said in a statement.

China let the yuan weaken past the key 7-per-dollar level on Monday for the first time in more than a decade and later said it would stop buying US agricultural products.

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WASHINGTON (Reuters) - The US government has determined that China is manipulating its currency, and will engage with the International Monetary Fund to eliminate unfair competition from Beijing, US Treasury Secretary Steven Mnuchin said in a statement on Monday.

"China has a long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market," the Treasury Department said in a statement. "In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past."

"The context of these actions and the implausibility of China's market stability rationale confirm that the purpose of China's currency devaluation is to gain an unfair competitive advantage in international trade," the Treasury added.

China let the yuan weaken past the key 7-per-dollar level on Monday for the first time in more than a decade and later said it would stop buying US agricultural products, inflaming a worsening trade war with the United States.

The sharp 1.4% drop in the yuan comes days after US President Donald Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief ceasefire in a bruising trade war that has disrupted global supply chains and slowed growth.

The last time the United States named China a currency manipulator was in 1994. The US Treasury had designated Taiwan and South Korea as currency manipulators in 1988, the year that Congress enacted the currency review law. China was the last country to get the designation, in 1994.

The dollar fell to a two-week low against the euro after the Treasury statement.

(Reporting by Andrea Shalal, David Lawder, Lesley Wroughton and Makini Brice; Editing by Sandra Maler and Lisa Shumaker)