Vietnam’s main objective of its foreign-exchange policy is to control inflation and stabilize the macro-economy, not for unfair trade gains, said the State Bank of Vietnam (SBV) on December 17.
|The State Bank of Vietnam refutes US claim that Vietnam is gaining unfair competitive advantage in international trade.|
The statement came one day after the US Treasury labeled Vietnam and Switzerland as currency manipulators, along with adding three new names, including Taiwan, Thailand and India in a watch list of countries it suspects of deliberately devaluing their currencies against the dollar.
Others on the list include China, Japan, Korea, Germany, Italy, Singapore and Malaysia.
Under its semi-annual currency manipulation report, the Treasury stated Vietnam had acted to gain “unfair competitive advantage in international trade as well.”
The US uses three criteria to determine if a country is a currency manipulator. Besides the current account surplus criterion, two other criteria are a bilateral goods trade surplus with the US of at least US$20 billion; and intervention in the foreign-exchange market that exceeds at least 2% of GDP.
However, from SBV’s point of view, Vietnam’s trade and current account balances favorable to Vietnam with surpluses with the US are “result of factors related to the characteristics of the Vietnamese economy.”
The SBV’s decision to buy in foreign currencies recently was aimed at ensuring the smooth operation of the foreign exchange market amid an abundant of foreign currency supply.
“The move would help contribute to stabilizing Vietnam’s macro-economic conditions and build up the country’s foreign exchange reserves, which remains low compared to other countries in the region and to keep the national financial security intact.”
“Vietnam gives priority to a stable and sustainable trade-economic relation with the US,” stated the bank, adding it will continue to work with its US peers to address issues of shared concern towards a harmonized and fair-trade relations under the bilateral action plan.
In parallel with such efforts, the SBV continues to manage the foreign exchange policy to keep the inflation under control and a stable macro-economy, in turn supporting economic growth.
“The decision-making process is based on the market situation and objectives of the monetary policy, not to create unfair trade gains,” stressed the SBV.