Vietnam back on US’s currency manipulation monitoring list after one year

The U.S. Department of Treasury has placed Vietnam on its “monitoring list” for currency manipulation again, a department report said Tuesday.

Vietnam had been removed from the list in November 2022 after featuring several times in the list.

The latest currency manipulation monitoring list also features mainland China, Germany, Malaysia, Singapore and Taiwan.

In its November edition of the “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States” report, the U.S. Treasury said currency practices and macroeconomic policies of countries in the “monitoring list,” also major trading partners of the U.S., merit close attention.

The report focused on possible unfair activities made by major trading partners of the U.S., including a significant bilateral trade surplus with the U.S., a material current account surplus, and engagement in persistent one-sided intervention in the foreign exchange market. Among these criteria, Vietnam made the monitoring list with developments related to current account and bilateral trade.

The report said Vietnam’s current account has swung back into substantial surplus after prolonged deficits due to Covid-19 impacts on production and prices. Vietnam’s current account balance stood at 4.7% of GDP over the four quarters through June 2023.

Meanwhile, Vietnam’s trade surplus with the U.S. has expanded dramatically over the past five years, reaching $106.3 billion in the four quarters through June 2023, while service deficit was $1.6 billion.

The report also said the department “remained satisfied with the progress made by Vietnam and will continue to engage closely with the State Bank of Vietnam (SBV) on currency issues.”

The U.S Treasury noted further that Vietnam’s foreign exchange reserves fell 12.2% year-on-year to $89.2 billion as of June 2023, equivalent to 21% of the country’s GDP.

In a statement on Wednesday, the State Bank of Vietnam noted that The U.S. Treasury highly rated Vietnam's control of monetary policy and exchange rate, which has addressed the U.S. side's concerns and maintain the macroeconomy and the financial-money market amid challenges.

"In the joint statement of the elevation of the U.S-Vietnam comprehensive relationship to a comprehensive strategic partnership, the U.S. lauded Vietnam's efforts in modernizing and enhancing the transparency in control of monetary policy and exchange rate, towards macroeconomic stability and safe operation of the banking system.

"Per the bilateral comprehensive strategic partnership, the State Bank of Vietnam will continue cooperation with the U.S. Treasury, in order to boost the understanding, information exchange, and handlings of mutual concerns."

The U.S Treasury report concluded that no major U.S. trading partner manipulated the rate of exchange between its currency and the U.S. dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade during the four quarters through June 2023.

On November 2, Secretary of the U.S. Treasury Janet Yellen previewed the Biden Administration’s Economic Approach Toward the Indo-Pacific, a move to further the United States engagement to the region and to the world's future.

"Vietnam also plays a growing role in the global semiconductor supply chain. This is exactly the opportunity our friendshoring approach positions us to act on: We can bolster America’s supply chain resilience while advancing common values and growing our and partners’ economies," Yellen said.

"We’re incentivizing American companies to invest in Vietnam, from Amkor Technology’s launch of a test and assembly plant last month to plans by Synopsys and Marvell for new semiconductor design centers. And we’re pairing financing with more holistic support, such as workforce development initiatives in collaboration with the Government of Vietnam and the private sector. This will support workers in Vietnam. And it’ll help create good jobs for Americans elsewhere along the semiconductor industry value chain," she added.