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The State Bank stated that the management of the exchange rate in recent years was only to control inflation and stabilize the macroeconomy, not to create a competitive advantage.
On December 16, the US Department of Finance issued a report “Macroeconomic Policies and Currencies of US Major Trading Partners”, which determined that Vietnam and Switzerland manipulated their currencies.
This report is published twice a year. According to the US Trade Promotion and Improvement Act of 2015, the Ministry of Finance of this country needs an advanced analysis on the foreign exchange policies and the foreign economy of the main trading partners. The “currency manipulation” is determined to satisfy 3 criteria of bilateral trade surplus with the United States, current balance surplus and foreign exchange intervention.
These criteria include a bilateral merchandise trade surplus with the United States of at least $ 20 billion; The current account surplus is equal to at least 2% of GDP; Unidirectional and prolonged intervention in the foreign exchange market, represented by the net purchase of foreign currency for at least 6 months in a 12-month period with a total net purchase of foreign currency equivalent to at least 2% of GDP in a 12-month period.
According to the US report, Vietnam and Switzerland meet all 3 criteria above, so they are labeled “currency manipulation”.
In the announcement just posted on the morning of December 17, The State Bank of Vietnam stated that the control of the exchange rate during the last years was only aimed at achieving the objective of controlling inflation, stabilizing the macroeconomy, is not intended to create an unfair competitive advantage in international trade. Furthermore, Vietnam will also continue to maintain this policy in the coming times.
In addition, according to the operator, the bilateral trade surplus with the US and the current account surplus are the result of a series of factors related to the specificities of the Vietnamese economy. The recent intervention of the State Bank in the purchase of foreign currency is to ensure the proper functioning of the foreign exchange market, in the context of the abundant supply of foreign currency. This movement has contributed to stabilizing the macroeconomy, while strengthening the State’s foreign exchange reserve, which is at a low level compared to other countries in the region, in order to improve national financial and monetary security.
The State Bank affirmed that Vietnam attaches great importance to a stable economic-commercial relationship with the United States and will coordinate with the parties to discuss and work on issues of interest to Washington and on trade relations. harmony and equity in accordance with the Action Plan for cooperation between the two countries.
Also in the December 16 report, the US Treasury Department put India, Taiwan and Thailand on the official watch list. The other five economies (China, Japan, South Korea, Germany, Italy, Singapore and Malaysia) are still on the watch list from before.
Prior to that, the United States tagged currency manipulation with 3 economies. Last year it was with China, but it was eliminated in January of this year. Before that, China was also regarded as the 1992-1994 currency manipulation period. In the late 1980s, the two economies were called Japan and Taiwan.
However, the WSJ considers the move by the US Treasury Department to be primarily symbolic, so the government should consult with the International Monetary Fund (IMF) to remove the unfair advantage that money gives the nation. By law, currency tampering labeling will involve negotiations, which may end up imposing import duties. However, no automatic punishment will be applied.
Ha Thu
