The US Treasury department has accused the Chinese government of displaying a "lack of flexibility" in the management of the yuan's exchange rate.In a wide-reaching report to Congress published today (October 16th), the Treasury attacked the internal management of the yuan and declared that its rate-setting policy has veered away from supply and demand fundamentals and returned to "a policy of maintaining a largely-stable renminbi-dollar exchange rate".Combined with the continued accumulation of foreign currency reserves, this lack of flexibility risks "unwinding some of the progress made in reducing imbalances", the report declared.However, the Treasury did concede that Chinese authorities have made some progress in liberalising US dollar/yuan exchange rates.Speaking to Bloomberg, Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co in New York, stated that the two countries appear to have toned down their rhetoric in recent weeks, with the US pushing less heavily for exchange rate reform and China refraining from calling for a replacement reserve currency.