FACTBOX-U.S. Treasury tags Switzerland and Vietnam currency manipulators

(Adds details from U.S. Treasury announcement, Swiss reaction)

Dec 16 (Reuters) – The U.S. Treasury labeled Switzerland and Vietnam as currency manipulators on Wednesday and added three new names to a watch list of countries it says it suspects of taking measures to devalue their currencies against the dollar.

The designation, which can lead to sanctions, is based on three criteria: A $20 billion-plus trade surplus with the United States, currency intervention exceeding 2% of gross domestic product and a current account surplus exceeding 2% of GDP.

The Treasury also said its “monitoring list” of countries that meet some of the criteria for being labeled as currency manipulators has hit 10, with the additions of Taiwan, Thailand and India. Others on the list include China, Japan, Korea, Germany, Italy, Singapore and Malaysia.


* Switzerland had already been on the monitoring list and ran a trade surplus with the United States of $21.8 billion last year, according to the U.S. trade representative, and had a current account surplus about 11% of gross domestic product.

* The Swiss National Bank (SNB) spent 90 billion Swiss francs ($102 billion) in the first half of 2020 to slow down the currency’s gains as investors have sought safe havens

* That is already roughly 13% of last year’s gross domestic product, way above Washington’s 2% threshold.

* The SNB has long argued it is not trying to weaken the franc to gain a trade advantage, but rather to head off deflation.

* On Wednesday, the Swiss National Bank said it would not alter its monetary policy despite Switzerland’s being named a currency manipulator, adding the central bank remained willing to act aggressively in foreign exchange markets.


* Vietnam’s trade surplus with the U.S. widened to $57 billion over the first 11 months of this year, up from $42 billion in the same period last year, according to Vietnam’s customs data.

* It had a current account surplus at 5% of GDP last year, according to the World Bank.

* The dong is up slightly for the year, has gained 2.2% from March lows and is up 0.2% in the past two months.

* Vietnam says it does not devalue its currency to generate an unfair trade advantage, however it is on Washington’s watchlist and was hit with tariffs over the issue in November.

** The U.S. Treasury’s semi-annual currency manipulation report said that at least part of Vietnam’s foreign exchange intervention was aimed at pushing down the dong for a trade advantage.

** Vietnam’s trade ministry declined to comment and referred questions to the foreign ministry.


* Taiwan’s trade surplus with the United States hit $23 billion last year and the current account surplus was 10.5% of gross domestic product, both well above Washington’s thresholds.

* Surging exports have put upward pressure on the Taiwan dollar, which is up 6.3% this year and at a 23-year high.

* Taiwan bought $3.9 billion U.S. dollars in the first half of 2020 to tame the currency’s gains.

* Analysts at Bank of America say accumulated FX intervention is above the 2% Treasury threshold

* The island was last formally labelled a currency manipulator by the United States in December 1992, but was later put on the U.S. Treasury monitoring list in 2016 and 2017.


* Current account surplus was 7% of GDP in 2019, according to the Bank of Thailand, and it ran a trade surplus of $20.1 billion according to the U.S. Trade Representative.

* A weakening dollar, domestic gold selling and investment flows have pushed the baht up by 10% against the dollar since late March to hit a one-year high.

* Bank of Thailand says it has been intervening in the foreign exchange market to restrain the baht, and Bank of America analysts say it has spent more than double Washington’s threshold.


Germany, India, Italy, Japan, Malaysia, Singapore and South Korea have all violated two of the three U.S. Treasury criteria, according to a report published by U.S. think tank, the Council on Foreign Relations.

* Bank of America analysts noted that currency intervention in India and Singapore, as well as Thailand and Taiwan, has been particularly aggressive this year.

* Wednesday’s report also said that India and Singapore had intervened in the foreign exchange market in a “sustained, asymmetric manner”, but did not meet other requirements to warrant designation as manipulators.


* There is no automatic punishment with a currency manipulator label, though U.S. law requires Washington to demand negotiations with designated countries.

* Diplomatically, labelling U.S. allies as currency manipulators in the middle of a pandemic could be uncomfortable, particularly in Asia where warming ties with countries such as Vietnam have been strategically important. ($1 = 0.8830 Swiss francs)

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