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 were removed from the list of countries labeled by the United States as currency manipulators, overturning 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 on Friday that no country currently meets the US criteria as a manipulator. He said, however, that Vietnam and Switzerland, as well as the autonomous island of Taiwan, would be subject to increased surveillance.
At the highest level of scrutiny that the report calls “enhanced engagement,” Vietnam, Switzerland, and now Taiwan will face further scrutiny of their practices under laws passed by Congress requiring the administration to call in countries that engage in currency manipulation to gain unfair trade advantages over the United States.
The Treasury did not designate China as a currency manipulator, which the Trump administration did in 2019 during a tense trade standoff with the world’s second-largest economy. China is on a list of 11 countries tracked below that of Vietnam, Switzerland and Taiwan.
Japan, South Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand and Mexico are also on the list. Only Ireland and Mexico were added to the list on Friday.
None of the countries on either list have U.S. economic sanctions against them due to alleged currency manipulation.
Countries that the United States claims are involved in manipulation typically engage in the sale of their own currency and the purchase of US dollars in order to reduce the value of their currency while increasing the value of the dollar. A weaker currency can make a country’s exports cheaper in foreign markets while making imports more expensive.
In the history of these twice-yearly reports to Congress since 1988, the Treasury has referred to only three foreign governments as currency manipulators. The Trump administration designated China as a currency manipulator in 2019, and the United States also designated China as a currency manipulator from 1992 to 1994. The Treasury also imposed this label on Japan and Taiwan in the years 1980.
Being named as a currency manipulator can mean imposing U.S. economic sanctions if a period of negotiations fails to resolve issues the U.S. deems reprehensible.
Private analysts have supported the Biden administration’s withdrawal from Vietnam and Switzerland as currency manipulators.
Eswar Prasad, professor of economics at Cornell University, said the new administration decided not to use the report as an overtly political tool that trapped US allies.
“This will help rebuild some of the credibility of the report, so that it will serve a useful purpose when it is really necessary in the future to highlight the unfair currency management practices of other countries,” he said. declared Prasad.
