Trump fires parting shot as US labels Switzerland, Vietnam as currency manipulators

A US Treasury official said the Biden transition team had not been briefed, adding: “They are not implicated in this. This is a decision of the Trump administration.”

A spokesman for the Biden transition team could not immediately be reached for comment.

To be labelled a manipulator by the US Treasury, countries must at least have a $US20 billion-plus bilateral trade surplus with the United States, foreign currency intervention exceeding 2 per cent of gross domestic product and a global current account surplus exceeding 2 per cent of GDP.

Vietnam and Switzerland exceeded these criteria by a “substantial margin,” a Treasury official said.

The President-elect’s team has been critical of other moves by US Treasury Secretary Steven Mnuchin, including ending some Federal Reserve pandemic lending programs.

Mnuchin said in a statement that Treasury “has taken a strong step today to safeguard economic growth and opportunity for American workers and businesses” and will work with both countries “toward eliminating practices that create unfair advantages for foreign competitors.”

US Treasury Secretary nominee Janet Yellen could alter the findings in her first currency report, which is due in April.

Swiss defiant

In response to the allegation, the Swiss National Bank said it does not manipulate its currency and its monetary policy would be unchanged, adding that it “remains willing to intervene more strongly in the foreign exchange market”.

Vietnam’s trade ministry declined to comment on the report and referred questions to the foreign ministry in Hanoi.

The report said that at least part of Vietnam’s foreign exchange intervention was aimed at pushing down the dong for a trade advantage, while at least part of Switzerland’s action was aimed at pushing down the Swiss franc to prevent effective balance of payments adjustments.

The Treasury said Switzerland’s foreign exchange intervention totalled 14 per cent of GDP.

Vietnam, which has seen a rush of foreign investment by companies seeking to avoid US tariffs on Chinese goods, saw intervention of more than 5 per cent of its GDP, it added.

The Treasury official said the United States wants to work cooperatively with both countries to bring them back below the manipulation thresholds and declined to speculate on whether the process could lead to US tariffs on their goods.

Among remedies specified in US laws governing the currency report are limiting offending countries’ access to US government procurement contracts and to development finance.

Vietnam could be hit with tariffs under a separate investigation by the US Trade Representative’s office now underway into the causes of an undervalued dong. The Treasury findings could influence this probe and some in the business community fear that Trump may move quickly on it.

The label briefly lifted the value of the Swiss franc against the dollar. Forex strategists said the move may make it slightly more difficult for the SNB to intervene, the easing of the coronavirus pandemic would reduce safe-haven upward pressure on the franc.

The Treasury also said its “monitoring list” of countries that meet some of the criteria has hit 10, with the additions of Taiwan, Thailand and India. Others remaining on the list include China, Japan, Korea, Germany, Italy, Singapore and Malaysia.

The report also said that India and Singapore had also intervened in the foreign exchange market in a “sustained, asymmetric manner” but did not meet other requirements to warrant designation as manipulators.

Reuters