U.S. Treasury Dept: Vietnam is not currency manipulator
U.S. Treasury Dept: Vietnam is not currency manipulator
The U.S. Department of the Treasury on January 14 issued a report concluding that Vietnam is not manipulating its currency but noted that the Southeast Asian country is still being monitored.
The three criteria for labeling a country a currency manipulator are earning over US$20 billion in surplus in its annual trade with the United States, holding a current account surplus of over 2% of its gross domestic product (GDP) and purchasing foreign currency over six to 12 months in excess of 2% of GDP, the local media reported.
According to the U.S. Department of the Treasury’s report on the macroeconomic and foreign exchange policies of major trading partners of the United States, Vietnam had a surplus of US$47 billion in trade with the United States over the four quarters through June last year, meeting the first criterion only.
Over the period, Vietnam’s current account balance steadily narrowed to 1.7% of its GDP, and its net purchases of foreign exchange were 0.8% of its GDP.
Earlier, Le Minh Hung, governor of the State Bank of Vietnam (SBV), confirmed that the Vietnamese Government and the central bank would never use the exchange rate to compete with the country’s trade partners or abuse monetary policies to ease trade activities.
The United States recommended that Vietnam prioritize improving the quality and accuracy of its financial data, which will allow the SBV to better monitor and respond to financial vulnerabilities.
It should also reduce its reliance on credit growth targets to enable financial institutions to better allocate capital and manage risks. As Vietnam strengthens its monetary policy framework and its reserves reach adequate levels, the country should reduce its interventions and allow for movement in the exchange rate in line with economic fundamentals.
In the coming months, the United States will continue monitoring Vietnam’s trade data and macroeconomic and monetary policies and will work with the Vietnamese agencies if needed.
