US Treasury Finds no Major Currency Manipulation by Trading Partners
Treasury Report on Currency Manipulation
The U.S. Treasury released its semi-annual currency report for the four quarters ended June 2023. This report stated that no major trading partners were found to be manipulating their currencies. However, Vietnam was put back on the foreign exchange “monitoring list,” while Switzerland and South Korea were removed from the same scrutiny.
Vietnam, China, Germany, Malaysia, Singapore, and Taiwan on Monitoring List
The report indicated that Vietnam, China, Germany, Malaysia, Singapore, and Taiwan were included on the monitoring list. These countries exceeded two of three thresholds set by the Treasury: a trade surplus with the U.S. above $15 billion, a high global current account surplus above 3% of GDP, and persistent net foreign currency purchases exceeding 2% of GDP over a year.
Reason for Vietnam’s Inclusion on Monitoring List
Vietnam was returned to the monitoring list after its global current account surplus shot up to 4.7% of GDP during the monitoring period. This increase was attributed to the rapid growth of Vietnam’s exports in recent years, as companies shifted some production to the fast-growing Southeast Asian country from China.
Switzerland and South Korea Removed from Monitoring List
Switzerland and South Korea were removed from the monitoring list after meeting only one criterion for two monitoring periods in a row. Former U.S. President Donald Trump’s administration had previously declared both Vietnam and Switzerland as currency manipulators due to their interventions, which led to extensive engagement between the U.S. Treasury and Swiss and Vietnamese authorities.
Current Status of Currency Manipulation
A U.S. Treasury official stated that Vietnam does not appear to be “slipping” in its foreign exchange practices or its engagement with U.S. authorities on currency issues. Additionally, the official mentioned that there have been interventions in the foreign exchange markets, notably by Japan, aimed at propping up currency values against the dollar rather than pushing them down for an export advantage.
The official also highlighted that China remains on the monitoring list due to a lack of transparency in its foreign exchange practices, including interventions in its yuan currency. The Treasury estimated that China intervened to support the yuan in the latest monitoring period, but not to levels that would trigger any thresholds.
