Vietnam, Taiwan cross US Treasury currency thresholds, but no manipulator labels


The United States Department of the Treasury is seen in Washington, DC, the United States, on August 30, 2020. REUTERS / Andrew Kelly / File Photo

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December 3 (Reuters) – Vietnam and Taiwan again crossed US Treasury thresholds for possible currency manipulation and enhanced analysis under a 2015 trade law, but the department on Friday refrained from qualifying them officially manipulators.

Switzerland also narrowly escaped the triggering of the three manipulation criteria in the Treasury’s latest biannual currency report, thanks to revised and broader measures of trade and current account surpluses and interventions in the foreign exchange market.

All three had crossed Treasury thresholds in April, prompting the United States to become more active in reviewing its practices. The administration of former President Donald Trump called Vietnam and Switzerland manipulative in December, citing a 1988 monetary law.

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In the latest report, the Treasury found that no major trading partners in the year through June 2021 sought to manipulate their currencies for trade advantage or to prevent effective balance of payments adjustments.

The department said it would continue to work with Vietnam and Taiwan to address U.S. concerns. For Switzerland, which has only exceeded the trade and exchange intervention thresholds, the Treasury said it would continue to conduct an in-depth analysis of the practices of the Alpine country for another year.

Switzerland was transferred to the Treasury’s “Watch List” of the main trading partners which deserve special attention to their monetary practices, as well as 11 other countries which remained on the list: China, Japan, South Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand and Mexico.

The Treasury said it was “satisfied with Vietnam’s progress to date” and would continue the engagement started in May with Taiwan.

“This commitment includes the call for the development of a plan with specific actions to tackle the underlying causes of the currency’s undervaluation and external imbalances,” the Treasury said of the Taiwan’s commitment.

The United States in July dropped the threat of imposing tariffs on Vietnamese products after the country’s central bank agreed with the U.S. Treasury to refrain from manipulation and make its exchange rate practices more transparent. The deal follows a Reuters report that Vietnam had sought to shift its dollar cash purchases to forward purchase contracts with banks to evade Treasury criteria.


The latest Treasury report did not trigger any significant immediate moves in the Taiwan dollar, Vietnamese dong or Swiss franc.

A Taiwanese central bank official said talks with Washington will continue, but blamed Taiwan’s large trade deficit with the United States on strong demand for tech products fueled by the COVID-19 pandemic and production changes caused by US tariffs on Chinese products. Read more

Switzerland’s finance ministry reiterated its long-standing denial that the country’s central bank is engaging in manipulation of the franc for economic benefit.

“Foreign exchange interventions are necessary for Swiss monetary policy in order to maintain appropriate monetary conditions and therefore price stability,” the ministry said in a statement.


The Treasury report criticized China’s lack of transparency in its foreign exchange practices, citing a large gap between the People’s Bank of China foreign exchange assets and net foreign exchange settlement data, suggesting that state-owned banks were used to conduct official interventions.

“The Treasury will continue to closely monitor China’s use of exchange rate management, capital flows and macroprudential measures and their potential impact on the exchange rate,” he said in the report. .

A Reuters analysis in June found that Chinese banks had raised more than $ 1 trillion amid little official intervention by the PBOC, posing a risk to the government’s ability to control the country’s exchange rate. yuan.

Treasury Secretary Janet Yellen told a Reuters Next virtual conference on Thursday that she would continue to engage her Chinese counterpart, Vice Premier Liu He, on exchange rate policy issues.


In the second currency report released by the Biden administration, the Treasury also adjusted the three manipulation thresholds under the 2015 law to include somewhat broader measures of trade surpluses, foreign exchange intervention, and surpluses. from the current account. Read more

A treasury official said Switzerland would have passed the old current account surplus threshold and narrowly missed exceeding the new one.

“The Treasury is working tirelessly to promote a stronger and more balanced global recovery that benefits American workers, including through close engagement with major economies on currency issues,” Yellen said in an accompanying statement. The report.

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Reporting by David Lawder and Andrea Shalal; Additional reporting by Ben Blanchard and John Revill Editing by Dan Burns, Chizu Nomiyama and Andrea Ricci

Our Standards: Thomson Reuters Trust Principles.


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