The U.S. Treasury said Tuesday that no major trading partners appear to be manipulating their currencies, but it put Vietnam back on a currency “watch list” while removing Switzerland and South Korea from the same scrutiny.
Vietnam, China, Germany, Malaysia, Singapore and Taiwan are on the monitoring list, according to the Treasury Department’s semi-annual currency report for the four quarters ended June 2023.
These countries exceeded two of three thresholds: a trade surplus with the U.S. of more than $15 billion, a large global current account surplus of more than 3% of gross domestic product, and sustained net foreign exchange purchases of more than 2% of GDP over a year.
The Treasury said Vietnam was returned to the watch list after its global current account surplus rose to 4.7% of GDP during the monitoring period. Vietnam’s exports have grown rapidly in recent years as companies shift some production from China to the fast-growing Southeast Asian country.
Vietnam’s central bank said in a statement on Wednesday that it would maintain close contact with the U.S. Treasury and establish regular and effective dialogues to “address emerging issues in a timely manner.”
Switzerland and South Korea were removed from the monitoring list after meeting only one criterion for two consecutive monitoring periods.
The administration of former U.S. President Donald Trump declared both Vietnam and Switzerland currency manipulators in late 2020 due to their currency interventions, a move that sparked intense 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 or in its engagement with U.S. authorities on currency issues.
There have been some interventions in foreign exchange markets, notably by Japan, but the Treasury official said these have been aimed at supporting the value of the currency against the dollar, rather than pushing it down for an export advantage.
The official said China remains on the watch list because of a lack of transparency for its foreign exchange practices, including on the methods and manner of interventions in its yuan currency. The Treasury Department has estimated that China intervened to support the yuan in the most recent monitoring period, but not at levels that would trigger any thresholds.
