Economy

U.S. Treasury tags Switzerland and Vietnam currency manipulators

U.S. Treasury tags Switzerland and Vietnam currency manipulators”

The US Treasury labelled Switzerland and Vietnam as currency manipulators on Wednesday (Dec 16) and added three new names to a watch list of countries it says it suspects of taking measures to devalue their currencies against the dollar.

The Trump administration's swift removal of China's manipulator label just months after its August 2019 designation - in a move days before signing a bilateral trade deal in January - suggested a political element to the labeling.

He has accused many of them of using a weaker currency to sell their goods more cheaply at the expense of US producers. In 2019, she said, "It's really hard and treacherous to define when a country is gaming its currency to gain trade advantages".

Taiwan, Thailand and India went on that list, joining China, Japan, Germany and others.

Furthermore, in its semi-annual currency manipulation report, the Treasury said Vietnam had acted to gain "unfair competitive advantage in global trade as well".

The department determines whether a country is manipulating its currency by looking into the extent of intervention in foreign exchange markets and the size of the trade surplus with the United States, among other factors. Vietnam also ran afoul for restraining currency appreciation at a time of rising trade surpluses with the US.

The Treasury official said the United States wants to work cooperatively with both countries to bring them back below the manipulation thresholds and declined to speculate on whether the process could lead to USA tariffs on their goods.

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The findings in the report do not entail sanctions, but trigger "enhanced bilateral engagement" with each country to urge "development of a plan.to address the underlying causes of currency undervaluation and external imbalances".

The report was released just about a month ahead of President Donald Trump's expected departure from office following his defeat in the November 3 election.

A weaker currency makes a country's exports cheaper and thus more competitive on foreign markets and makes imports more expensive.

The report, which covers market activity from July 2019 to June 2020, was released during a coronavirus pandemic that has weakened the global economy this year and triggered volatility in foreign exchange markets. While the policies have not done much to lower America's overall trade deficit, the deficit with China has shrunk.

A senior Treasury official acknowledged that explanation, while indicating that the magnitude of Swiss intervention remains a key problem for the US.

The United States has only named three countries as currency manipulators.

Treasury reviewed 20 major USA trading partners with bilateral goods trade with the United States of at least $40 billion annually.



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