The U.S. Treasury Department has labeled Switzerland and Vietnam currency manipulators and added India, Thailand, and Taiwan to its watchlist. In a long-overdue foreign exchange report, the U.S. Treasury said it suspects the countries are deliberately devaluing against the dollar in order to influence the balance of payments.
In a statement, Treasury Secretary Steven Mnuchin said the U.S. would work with Switzerland and Vietnam to change policies that “create unfair advantages” for foreign `competitors.
“This engagement will include urging the development of a plan with specific policy actions to address the underlying causes of currency undervaluation and external imbalances,” the Treasury Department said.
U.S. Treasury Secretary nominee Janet Yellen could alter the designation when the department makes its first report under a Biden administration in April. Reuters, citing a Treasury official, said the Biden administration had not been briefed on the move. “They are not implicated in this,” the official said. “This is a decision of the Trump administration.”
In response to the designation, the Swiss National Bank said it does not manipulate its currency and its monetary policy would be unchanged.
“In light of the economic situation and the fact that the Swiss franc is still highly valued, the SNB remains willing to intervene more strongly in the foreign exchange market,” the bank said.
The trade ministry of Vietnam declined to comment.
“Switzerland is obvious. It is long overdue. I don’t think people who watch these things are much surprised,” Marc Chandler, chief market strategist at Bannockburn Global Forex, told MarketWatch, adding that the per capita GDP of Vietnam is 1/25th that of the U.S. “Is there any country that is too poor to bring down the full force of the U.S. government on?” Chandler said.
The Treasury Report also said India and Singapore intervened in foreign exchange markets in a “sustained, asymmetric manner.” In August 2019, the report accused China of manipulation before removing the designation in January after a trade agreement was announced.