Finance

U.S. Treasury says Vietnam, Taiwan exceed currency thresholds, but no manipulator labels

US Department of the Treasury in Washington, DC, US, August 30, 2020. REUTERS/Andrew Kelly/File Photo

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(Reuters) – The U.S. Treasury said on Friday that Vietnam and Taiwan continued to cross thresholds of potential currency manipulation and improve analysis under the 2015 U.S. Trade Act, but declined to formally label them as manipulators.

The Treasury said that in its semi-annual currency report, during the year to June 2021, none of the major trading partners of the United States sought to manipulate their currencies for commercial advantage or to prevent effective balance-of-payments adjustments under the 1988 Act.

She said Vietnam and Taiwan have bypassed trade surplus, current account and foreign exchange interference, and will continue to work with them to address US concerns.

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The Treasury said it was “satisfied with the progress Vietnam has made so far” and the continuation of the engagement that began in May with Taiwan.

“This participation includes urging the development of a plan with specific actions to address the underlying causes of currency depreciation and external imbalances,” the Treasury said of Taiwan’s participation.

The Treasury said that Switzerland, which the Trump administration called a manipulator in 2020, only missed two of the three thresholds, but that it will continue to conduct an in-depth analysis of Switzerland’s practices for at least another year.

The Treasury said it has moved Switzerland to a “watch list” of major trading partners who deserve close attention in their currency practices, along with 11 other countries: China, Japan, South Korea, Germany, Ireland, Italy, India, Malaysia, Singapore and Thailand. , and Mexico.

silent reaction

The report did not raise any significant immediate movements in the Taiwanese dollar, the Vietnamese dong or the Swiss franc.

A Taiwan central bank official said discussions with Washington would continue, but he blamed Taiwan’s large trade deficit with the United States on strong demand for technology products fueled by the COVID-19 pandemic and production shifts imposed by tariffs on Chinese goods. Read more

Switzerland’s finance ministry has reiterated its longstanding denial that the country’s central bank is engaging in manipulating the franc for economic advantage.

“Foreign exchange interventions are essential to 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 foreign exchange practices, noting a wide discrepancy between the foreign exchange assets of the People’s Bank of China and net foreign exchange settlement data, suggesting that state-owned banks were used to conduct official interventions.

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

A Reuters analysis in Junefound shows that Chinese banks have raised more than $1 trillion, posing a risk to the government’s ability to control the yuan’s exchange rate.

At the next Reuters virtual conference on Thursday, Yellin said she would continue to communicate with her Chinese counterpart, Vice Premier Liu He, on foreign exchange policy issues.

new goals

In the Biden administration’s second currency report, the Treasury also adjusted the three manipulation thresholds under the 2015 law to include slightly broader measures of trade surpluses, foreign exchange interventions and current account surpluses.

A Treasury official said Switzerland would have done three of the old thresholds, but only two under the new measurements.

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

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(Reporting by David Lauder and Andrea Shalal). Editing by Dan Burns and Chizu Nomiyama

Our Standards: Thomson Reuters Trust Principles.

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