The US and China have embarked on a public row over foreign exchange policy only three days after Barack Obama's inauguration, with China denying last night it was "manipulating" its currency and saying the allegation would only fan protectionist sentiment in the US.

The Chinese government was responding to claims by Tim Geithner, President Obama's choice for Treasury secretary, who told a Senate nomination hearing on Thursday that China was "manipulating" the renminbi. Mr Geithner's blunt tone appeared to indicate