US pulls back on charge Switzerland, Vietnam manipulate currency

Bank notes of different currencies, including Euro, US Dollar, Turkish Lira or Brazilian Reais, are photographed in Frankfurt in this illustration released May 28, 2017. — Reuters pic
Bank notes of different currencies, including Euro, US Dollar, Turkish Lira or Brazilian Reais, are photographed in Frankfurt in this illustration released May 28, 2017. — Reuters pic

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WASHINGTON, April 16 — The US Treasury rolled back a Trump-era accusation against Switzerland and Vietnam of manipulating their exchange rates to gain a competitive trade advantage, saying today there was “insufficient evidence” for the charge.

The withdrawal of the accusation made in the Treasury’s semi-annual report to Congress came as Taiwan was added to a separate list of countries meeting the criteria for scrutiny of their currency policies, but without being labelled a manipulator.

China remains on Treasury’s “Monitoring List,” after being removed from the ranks of currency manipulators in January 2020, just before then-president Donald Trump signed an initial trade pact with Beijing.

Beijing has long been a target of scrutiny under the report, and in the latest edition, “Treasury urged China to improve transparency regarding its foreign exchange intervention activities” and policies.

The watch list also includes Japan, Korea, Germany, Italy, India, Malaysia, Singapore and Thailand, as well as Ireland and Mexico, which were added to the December list.

“Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage,” Treasury Secretary Janet Yellen said in a statement.

Congress requires the analysis to single out countries that might be actively trying to keep their currencies weaker against the US dollar, which would make their exports cheaper while making American goods more expensive.

However, the findings in the report are largely symbolic and do not entail sanctions. Instead they trigger “enhanced bilateral engagement” with each country to urge “development of a plan... to address the underlying causes of currency undervaluation and external imbalances.”

A Treasury official told reporters that the Covid-19 pandemic made analysis difficult given it caused massive disruptions in global trade and obliged governments to roll out spending programs to ease the damage.

Treasury reviews 20 major US trading partners with bilateral goods trade with the United States of at least US$40 billion (RM165 billion) annually. Those countries account for about 80 per cent of US goods trade, the official said.

The criteria are a large trade surplus with the United States, a significant current account surplus, and evidence of “persistent, one-sided intervention” in foreign exchange markets.

A Treasury official told reporters that Taiwan exceeded the thresholds by sizeable margins, as did Vietnam and Switzerland despite their removal from the list of currency manipulators.

Congress requires Treasury to engage in “enhanced consultations” with those countries, which “includes urging the development of a plan with specific actions to address the underlying causes of currency undervaluation and external imbalances,” the report said. — AFP

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