US finds no major trade partners manipulated currencies

By David Lawder

WASHINGTON (Reuters) – The U.S. Treasury on Tuesday said no major trading partners appeared to be manipulating their currencies, but it put Vietnam back onto a foreign exchange “monitoring list,” while removing Switzerland and South Korea from the same scrutiny.

The Treasury’s semi-annual currency report for the four quarters ended June 2023 showed that Vietnam, China, Germany, Malaysia, Singapore, and Taiwan were included on its monitoring list.

These countries exceeded two of three thresholds: a trade surplus with the U.S. above $15 billion, a high global current account surplus above 3% of gross domestic product, and persistent net foreign currency purchases exceeding 2% of GDP over a year.

The Treasury said Vietnam was returned to the monitoring list after its global current account surplus shot up to 4.7% of GDP during the monitoring period. Vietnam’s exports have grown rapidly in recent years as companies shift some production to the fast-growing Southeast Asian country from China.

Switzerland and South Korea were taken off the monitoring list after they met only one criterion for two monitoring periods in a row.

Former U.S. President Donald Trump’s administration at the end of 2020 declared both Vietnam and Switzerland as currency manipulators due to their currency interventions, a move that launched intensive engagement between the U.S. Treasury and Swiss and Vietnamese authorities.

A U.S. Treasury official said that Vietnam does not appear to be “slipping” in its foreign exchange practices nor in its engagement with U.S. authorities on currency issues.

There have been some interventions in the foreign exchange markets, notably by Japan, but the Treasury official said that these have been aimed at propping up currency values against the dollar, rather than pushing them down for an export advantage.

The official said China remains on the monitoring list due to lack of transparency for its foreign exchange practices, including on the methods and manner of interventions in its yuan currency. The Treasury has estimated China intervened to support the yuan in the latest monitoring period, but not to levels that would trigger any thresholds.