Vietnam stuck on US currency manipulation watchlist

By Quynh Trang   January 15, 2020 | 03:20 am PT
Vietnam stuck on US currency manipulation watchlist
An employee counts US dollars at a branch of HDBank in Ho Chi Minh City, Vietnam, January 12, 2018. Photo by Reuters/Kham.
The U.S. Department of Treasury has concluded no major American trading partner is a currency manipulator but placed 10 countries, including Vietnam, on its watchlist.

In the U.S. Treasury report on "Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the U.S." released Tuesday, Vietnam remained among 10 countries on the Treasury "Monitoring List" of major trading partners that merit close attention to currency practices.

The list also includes China, Germany, Ireland, Italy, Japan, South Korea, Malaysia, Singapore and Switzerland.

In its semiannual report, the U.S. Treasury reviews major American trading partners and determines whether they are currency manipulators based on the following criteria: a significant bilateral trade surplus with the U.S. of at least $20 billion over a 12-month period; a material current account surplus at least 2 percent of gross domestic product (GDP) over a 12-month period; and the occurrence of persistent, one-sided intervention demonstrated by the trading partner repeatedly conducting net purchases of foreign currency in at least 6 out of 12 months, with these net purchases totaling at least 2 percent of its GDP over a 12-month period.

This is the second time in a row Vietnam has been placed on the U.S. Treasury's currency manipulation watchlist, after the country was added last May due to meeting the first two out of three criteria.

The latest report, however, saw Vietnam meet only the first criteria as the country's bilateral trade surplus with the U.S. reached $47 billion, far exceeding the minimum value of $20 billion. As for the remaining two criteria, Vietnam's material current account surplus was equivalent to only 1.7 percent of its GDP, with net purchases of foreign currency totaling only 0.8 percent of GDP.

Le Minh Hung, Governor of the State Bank of Vietnam (SBV), affirmed the Vietnamese government and the SBV "never intend to use monetary policies in general, and exchange rates in particular, to unfairly compete with trading partners."

In the report, the U.S. Treasury recommended Vietnam prioritize improving the quality and accuracy of financial data, which would allow the SBV to better monitor and respond to financial vulnerabilities.

In the coming months, the U.S. would continue to monitor information and data on Vietnam's trade and current account, as well as its macroeconomic and currency policies, and would continue to work with Vietnamese authorities if necessary.

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