Vietnam News

Vietnam refutes US move to label it a currency manipulator

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The US Treasury designated Vietnam and Switzerland currency manipulators and added Taiwan, India and Thailand to its watch list But the State Bank of Vietnam said it does not use currency for unfair trade, and will work with US authorities to respond to their concerns

Vietnam’s central bank on Thursday refuted the US Treasury’s move to designate the Southeast Asian nation a currency manipulator, saying it does not use its exchange rates “to create an unfair competitive advantage in international trade”.

In a statement on its website, the the State Bank of Vietnam said Vietnam’s “exchange rate management in recent years is within its general framework of monetary policy and aims to achieve the consistent goal of controlling inflation, stabilising macroeconomy” and does not create an unfair competitive advantage for the nation.

The Vietnamese dong traded at 23,127 per US dollar, little changed from Wednesday. The benchmark VN Index of Vietnamese stocks lost 1 per cent in early trade and is poised for its biggest decline in a month.

Vietnam’s trade surplus with the US and its current account surplus are the result of a range of factors related to the peculiarities of the Vietnamese economy, the statement said.

The central bank’s recent purchase of foreign currencies “is to ensure the smooth operation of the foreign exchange market in the context of an abundant supply of foreign currencies”, the regulator said.

“It is also contributing to macroeconomic stability and at the same time strengthening foreign exchange reserves which are at low levels compared to other countries in the region to strengthen national monetary and financial security.”

The central bank said it will coordinate with government ministries and agencies to respond to US concerns for the mutual benefit of both countries.

“Vietnam attaches great importance to a stable and sustainable economic-trade relationship with the US,” the regulator said.

“At the same time, the State Bank will continue to administer its monetary policies to control inflation, stabilise the macroeconomy, support economic growth in a reasonable manner and manage exchange rates flexibly” in line with monetary policy goals that “are not aimed at creating unfair international trade competitive advantage,” it said.

On Wednesday, the US Treasury labelled Vietnam and Switzerland as currency manipulators, and added three new names to a watch list of countries it suspects of taking measures to devalue their currencies against the dollar.

Its “monitoring list” of countries that meet some of the criteria is now 10, with the additions of India, Taiwan and Thailand. Others on the list include China, Japan, South Korea, Germany, Italy, Singapore and Malaysia.

The report added 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.

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

Bloomberg – December 17, 2020

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