US Treasury removes forex manipulation tag from Switzerland and Vietnam

The department also declared Taiwan TWDUSD,
0.11
has met the criteria for in-depth analysis and would seek bilateral talks on the country’s monetary practices.

In a biannual report to Congress, the Treasury said China does not meet the criteria for currency manipulation or heightened engagement.

The Treasury urged China to improve transparency regarding its foreign exchange intervention activities, including the relationship between the central bank and the foreign exchange activities of public banks.

“The Treasury is working tirelessly to respond to the efforts of foreign economies to artificially manipulate their monetary values, which unfairly disadvantages American workers,” Treasury Secretary Janet Yellen said in a statement.

The Treasury added Ireland EURUSD,
+ 0.35%
and Mexico USDMXN,
-0.17%
to its list of eleven economies on a “watch list” that deserve special attention in their monetary practices.

China CNHUSD is also on the list,
+ 0.08%,
Japan USDJPY,
-0.39%,
South Korea USDKRW,
-0.27%,
Germany EURUSD,
+ 0.35%,
Italy EURUSD,
+ 0.35%,
India USDINR,
-0.25%,
Malaysia MYRUSD,
-0.14%,
Singapore SGDUSD,
+ 0.21%,
and Thailand THBUSD,
0.16.

Under the Trade Enforcement Act of 2015, the three criteria for “enhanced engagement” are: a 12-month trade surplus exceeding $ 20 billion; a world current account surplus of at least 2% over the same period; and net foreign exchange purchases equivalent to at least 2% of its GDP.

The Treasury said none of the three countries, to date, had met the stricter criteria in a separate 1988 law that countries “intervened in currency markets to prevent an effective balance of payments adjustment. or to gain an unfair competitive advantage in commerce ”.

Wall Street analysts previously noted that the consequences of labeling are not huge. The upcoming talks are seen as an opportunity to assess the trade policy stance of the Biden administration.

The Trump administration has taken no punitive action after labeling Switzerland and Vietnam as currency manipulators.

Swiss National Bank CHFUSD,
+ 0.57%
denied any form of currency manipulation.

Meanwhile, the US dollar fell 0.2% on Friday to 91.542, as gauged by the ICE US Dollar Index DXY,
-0.43%
a measure of the dollar against half a dozen currencies. The dollar is down 0.7% so far this week and 1.8% in April so far.