U.S. says Vietnam, Switzerland and Taiwan violate currency thresholds

The U.S. Treasury Department on Friday said it will continue enhanced engagement with Vietnam and Switzerland, and initiate similar talks with Taiwan after concluding all three countries met the criteria under a 2015 U.S. currency manipulation law.

Despite its finding, Treasury said there is insufficient evidence under an earlier 1988 law to conclude that Vietnam, Switzerland, or Taiwan are manipulating their exchange rates.

A Treasury official said it was possible for countries to meet the tests under the 2015 law and not be manipulating their currency.

The enhanced engagement includes urging the three countries to develop plans with specific actions to address the underlying causes of currency undervaluation and external imbalances, Treasury said in a statement.

Treasury said its continued enhanced engagements with Switzerland and Vietnam, coupled with a more thorough assessment of global economic developments as a result of the COVID-19 pandemic, will help it determine whether either country intervened in currency markets in 2020 “to prevent effective balance of payments adjustment or gain an unfair competitive advantage in trade.”

For Taiwan, Treasury said it would initiate enhanced engagement in line with the Trade Facilitation and Trade Enforcement Act of 2015. It expects those talks to help determine if Taiwan manipulated its currency under the 1988 law.

Treasury said no other major U.S. trading partner met the relevant 1988 or 2015 legislative criteria for currency manipulation or enhanced analysis during the review period.

Treasury urged China to improve transparency regarding its foreign exchange intervention activities, the policy objectives of its exchange rate management regime, the relationship between the central bank and foreign exchange activities of the state-owned banks, and its activities in the offshore yuan market.

Treasury said it found that 11 economies warrant placement on Treasury’s “Monitoring List” of major trading partners that merit close attention to their currency practices: China, Japan, Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, and Mexico. All except Ireland and Mexico were included in the December 2020 report to Congress.