The United States classifies Switzerland as a currency manipulator

US classifies Switzerland as currency manipulator – SNB reacts

The United States keeps a critical eye on Swiss monetary policy and thus the SNB’s currency purchases and classifies Switzerland and Vietnam as currency manipulators. The Swiss National Bank (SNB) defends itself against the accusations and wants to continue to intervene in the foreign exchange market.

According to the report released by the US Treasury on Wednesday afternoon, Switzerland now meets all the criteria used by the authority as an indicator of currency manipulation. In the latest study, Switzerland, like Vietnam, met all three criteria for assessing external imbalances in trade with the United States and unfair monetary practices, he said.

The US authorities will now intensify monetary policy consultations with both countries. The objective of the talks is to address open questions about imbalances in foreign trade, continues the Treasury.

All criteria were met for the first time

The US Treasury has been examining the foreign exchange practices of major trading partners since 2015, and indeed wants to report to the US Congress every six months in April and October. However, the latest report is from January 2020.

At the time, Switzerland met two of the three criteria set by the US Treasury and ended up on a watch list alongside countries like China, Germany, South Korea and Vietnam. Switzerland and Vietnam now meet all three criteria for the first time.

Another thorn in the side of the US authorities is Switzerland’s merchandise trade surplus with the United States, which has once again surpassed the $ 20 billion mark set by the Treasury. For four quarters to mid-2020, Switzerland significantly expanded the surplus to US $ 49 billion and is therefore above target, it is said.

For the second criterion, Americans examine a country’s current account and rely on analysis by the International Monetary Fund (IMF). Switzerland’s current account surplus compared to gross domestic product (GDP) amounted to 8.8 percent in mid-2020 and thus continues to clearly exceed the 2 percent threshold set by the Treasury.

Switzerland now also meets the third criterion, which refers to SNB interventions in the foreign exchange market. The Treasury puts foreign exchange purchases in relation to Swiss GDP and here, too, a threshold of 2 percent should not be exceeded.

In the current year, the SNB has vigorously intervened in the currency markets. According to his own information, it took 90 billion francs from January to June to weaken the Swiss franc. In the report, the Treasury estimates that purchases totaled 14 percent of GDP from July 2019 to June 2020.

Franken loses

In financial markets, despite SNB guarantees, the euro and the dollar have gained value against the Swiss franc. The euro even passed the threshold of 1.0800 francs and is currently trading at 1.0803 francs. Meanwhile, the US dollar costs 0.8861 francs, having fallen to its lowest level since 2015 at 0.8826 francs. At that time, the SNB raised the minimum exchange rate of the euro.

(hour / sda / awp)