Vietnam responds to US accusation of currency manipulation

The State bank of Vietnam affirms market intervention measures have not been made to create an unfair competitive advantage in relation to international trade.

The Washington Post reported the Treasury Department on Dec. 16 formally accused Vietnam and Switzerland, two trading partners of the US, of manipulating their currencies in ways that harmed US economic interests.

As part of the claims, a 71-page report for December has been released by the Treasury Department in which they conclude that both countries have met all three criteria set by Congress to determine when other countries are preventing market forces from setting relevant currency values.

This marks the first time that any of the US’ trading partners had breached these benchmarks set out in US law, including maintaining a large trade surplus with the US and conducting sizable intervention in terms of foreign exchange markets.

In response to this, the State Bank of Vietnam has affirmed that the exchange rate management in recent years, which is set out within the framework of the general monetary policy, aims to achieve the consistent goal of controlling inflation and stabilising the macro-economy. This policy does not set out to create an unfair competitive advantage that Vietnam can enjoy when participating in international trade.

The central bank has stated that the bilateral trade surplus that exists with the US, along with the current account surplus, are the result of a range of factors which relate to the peculiarities of the Vietnamese economy.

Most notably, the bank’s recent intervention of buying foreign currencies is to ensure the smooth operation of the foreign exchange market amid an abundant supply of foreign currencies. This serves to contribute to macroeconomic stability whilst simultaneously strengthening foreign exchange reserves which are currently at a low level in comparison to other regional countries, all of which is done to strengthen the national monetary and financial security.

Vietnam attaches great importance to a stable and sustainable economic-trade relationship with the US, the bank said, adding it will co-ordinate efforts alongside relevant ministries and branches to work on issues that are of concern for the US in the spirit of mutually beneficial co-operation toward a harmonious and equal trade relationship that runs in line with the plan of action on co-operation between both sides.

The State Bank has stated that it will continue to administer monetary policies in an effort to control inflation, stabilise the macro-economy, support economic growth within reason, and manage exchange rates in a flexible manner. This is in line with macro balances, market developments, and monetary policy goals, for the purpose of not creating an unfair competitive advantage in terms of international trade.