Central bank acts as US adds Vietnam to currency watch list

With Vietnam back on the U.S. currency watch list over an alleged trade advantage, the Southeast Asian country’s central bank aims to do all it can to maintain sustainable bilateral trade ties.

The State Bank of Vietnam (SBV) made the announcement Monday, adding that it would continue its monetary policy to control inflation, stabilize the macro-economy, and support economic recovery and development.

The central bank will also manage exchange rates flexibly in line with macro-economic balances, market movements and monetary policy targets.

The U.S. Treasury Department on Friday announced 12 economies on its "monitoring list", namely mainland China, Japan, South Korea, Germany, Italy, India, Malaysia, Singapore, Thailand, Taiwan, Vietnam, and Mexico. The list is in a semiannual report to Congress on currency manipulation.

The department assesses whether an economy has manipulated its currency exchange rates to gain an unfair trade advantage through three criteria - the size of trade surplus with the U.S., the size of current account surplus as a share of GDP, and the extent of intervention in foreign exchange markets.

The department’s latest report, which looked into developments in 2021, said Vietnam and Taiwan no longer meet all three criteria for enhanced analysis.

“As a result of discussions through the enhanced engagement process, Treasury and the State Bank of Vietnam reached an agreement in July 2021 to address Treasury’s concerns about Vietnam’s currency practices. Treasury continues to engage closely with the SBV to monitor Vietnam’s progress in addressing Treasury’s concerns and is thus far satisfied with progress made by Vietnam,” the department wrote June 10, 2022.