U.S. Treasury Department said on Thursday that no major trading partner of the United States manipulates exchange rate to gain unfair competitive advantage in international trade.

"Treasury has concluded that no major trading partner of the United States met the standards identified in Section 3004 of the Act," the department said in its semi-annual report sent to Congress on international economic and exchange rate policies.

The Omnibus Trade and Competitiveness Act of 1988 requires the Secretary of the Treasury to provide reports on "whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade."

The report welcomed China's exchange rate policy shift, calling it a "significant development."

China's central bank announced in June a decision to proceed further with the reform of the exchange rate regime to enhance the flexibility of the yuan, also known as renminbi (RMB)'s exchange rate.

Treasury Secretary Tim Geithner said the U.S. "will continue to work towards expanded U.S. export opportunities in China that support employment in the United States."

On a nominal effective basis, the dollar depreciated by 3.2 percent against the 17 currencies covered in the report in the second half of 2009, and appreciated by 2.8 percent through the first five months of 2010.

The report showed that except Brazil, the U.S. bilateral trade imbalances moderated in 2009 against all other economies covered in this report, and the country's current account deficit is at its lowest level in over a decade.

The report also provided a general assessment of the U.S. and world economy. The U.S. is now in its fifth quarter of economic growth, with an average growth rate of 3.5 percent per quarter on an annualized basis, well above the 2.4 percent weighted-average growth rate of other G-7 economies.

"The world economy was pulled back from the brink and has resumed growth, but a durable recovery is still not fully secure," the report noted.

The International Monetary Fund (IMF) now expects the global economy to grow 4.6 percent in 2010, which is nearly 2.5 times the pace of growth projected in the spring of 2009.

International trade has increased sharply and has nearly returned to its pre-crisis level following a collapse in value of more than 35 percent between the second quarter of 2008 and the first quarter of 2009, said the report.