Vietnam’s main objective in managing its monetary policy is to stabilize macro-economic conditions, not with the intention of gaining unfair trade gains.

Prime Minister Nguyen Xuan Phuc at the meeting. Photo: Quang Hieu.

Prime Minister Nguyen Xuan Phuc stressed the government stance in a meeting on December 18 in response to the US Treasury Department’s decision labelling Vietnam and Switzerland as currency manipulators.

PM Phuc's statement has previously been mentioned by both the State Bank of Vietnam (SBV), the country’s central bank, and the Ministry of Foreign Affairs on December 17.

Under the SBV’s explanation, 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.”

At the meeting, PM Phuc assigned related ministries and agencies to continue working with their US counterparts on maintaining strong bilateral relations that would bring mutual benefits for the people and enterprises from two countries.

“Over the years, the Vietnamese government’s active cooperation with the US has yielded  positive results in trade and investment,” he noted, adding the two sides are looking at issues to ensure a harmonized, sustainable and balanced trade relation.

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.

In addition to Vietnam and Switzerland named as currency manipulators, the US Treasury added 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.