In its semi-annual report to Congress on currency manipulation, the first under the Biden administration, the US Treasury Department said that no country currently meets the US criteria as a manipulator.
Vietnam and Switzerland have been removed from the list of nations labelled by the United States as currency manipulators, reversing a decision made by the Trump administration in December.
In its semi-annual report to Congress on currency manipulation, the first under the Biden administration, the US Treasury Department said Friday that no country currently meets the US criteria as a manipulator. It said, however, that Vietnam and Switzerland, as well as the autonomous island Taiwan, will be under enhanced monitoring.
At the higher level of scrutiny which the report called “enhanced engagement,” Vietnam, Switzerland and now Taiwan will be subjected to a closer review of their practices as part of laws passed by Congress requiring the administration to call out nations that are engaging in alleged currency manipulation to gain unfair trade advantages over the US.
The Treasury did not designate China as a currency manipulator, something the Trump administration had done in 2019 during a tense trade standoff with the world’s second-largest economy. China is included on a list of 11 countries being monitored at a lower level than Vietnam, Switzerland and Taiwan.
Also on the list with China are Japan, South Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand and Mexico. Only Ireland and Mexico were added to the list Friday.
None of the countries on either list has US economic sanctions against them due to alleged currency manipulation.
Nations that have been alleged by the US to be participating in manipulation generally engage in selling their own currency and buying US dollars as a way of lowering the value of their currency while boosting the value of the dollar. A weaker currency can make a country’s exports cheaper on foreign markets while making imports more expensive.
In the history of these twice-a-year reports to Congress going back to 1988, Treasury has only branded three foreign governments as currency manipulators. The Trump administration named China as a currency manipulator in 2019 and the US had also named China as a currency manipulator from 1992 to 1994. Treasury also imposed that label on Japan and Taiwan in the 1980s.
Being designated as a currency manipulator can mean the imposition of US economic sanctions if a period of negotiations fails to resolve the issues that the US finds objectionable.
Private analysts supported the Biden administration’s withdrawal of Vietnam and Switzerland as currency manipulators.
Eswar Prasad, an economics professor at Cornell University, said that the new administration had decided against using the report as an overtly political tool that ensnared US allies.
“This will help rebuild some of the credibility of the report so it will serve a useful purpose when it is truly needed in the future to highlight unfair currency management practices of other countries,” Prasad said.