Vietnam willing to work with US following unfair currency practices allegation

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Linh Pham 12:36, 2019/05/31

Vietnam continues affirming that it will extend efforts to boost trade with the US.

The State Bank of Vietnam (SBV), the country's central bank, has affirmed that it together with related agencies would be willing to work with the US Department of Treasury to address any issues that hinder the bilateral trade after Vietnam was put on the currency manipulation watchlist.

Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh and the US Secretary of the Treasury Steven Mnuchin. Photo: Mnuchin Tweeter

The SBV will continue maintain the currency policies which aim at multiple purposes of curbing inflation, stabilizing macroeconomics, and supporting economic growth "in a resonable way."

“The SBV will maintain flexible exchange policies which catch up with the domestic and global situation and cause no unhealthy international trade competition,” the bank said in a statement on its website.

The affirmation was made after the US Department of the Treasury listed Vietnam among nine countries in its “Monitoring List” that merits close attention to the trading partners’ currency practices.

Treasury’s report

In the department’s “Macroeconomic and Foreign Exchange Policies of Major Trading Partners” report released on May 29, Vietnam was viewed as one of nine US major trading partners under a range of three factors, including trade and current account imbalances and foreign exchange intervention.

Besides the current account surplus criterion, two other criteria are a bilateral goods trade surplus with the U.S. of at least $20 billion; and intervention in the foreign-exchange market that exceeds at least 2% of GDP.

The Treasury’s analysis is based on the standards and criteria in the 1988 Act and the 2015 Act. Beginning with this Report, Treasury will assess all US trading partners whose bilateral goods trade with the US exceeds US$40 billion annually.

In 2018, total goods trade of the US and 21 trading partners amounted to nearly US$3.5 trillion, accounting for more than 80% of all US goods trade last year.

The Treasury goal is to better identify where potentially unfair currency practices or excessive external imbalances may be emerging that could weigh on US growth or harm US workers and businesses, showed the report.

Vietnam’s willingness

In a visit to the US on May 22-23, Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh worked with several US secretaries, including Secretary of the Treasury Steven Mnuchin, whom Minh told that the government of Vietnam has been sharing more information and tackling pressing economic and financial problems.

In turn, Steven Mnuchin said trade and investment would be one of key pillars in the bilateral relations.

Vietnamese Deputy Prime Minister Vuong Dinh Hue in a phone call with the US Secretary of the Treasury Steven Mnuchin. Photo: VGP

On May 13, Vietnamese Deputy Prime Minister Vuong Dinh Hue talked on the phone with Steven Mnuchin about Vietnam’s extended efforts in settling issues relating to finance-currency, e-payment and car import.

In the phone conversation, Steven Mnuchin asked Vietnam to continue finance-currency discussions with the US agencies, the Vietnamese government said on its website.

In 2018, Vietnam’s goods trade surplus with the US hit US$40 billion, the sixth largest among the US trading partners. The report showed that Vietnam’s growing trade surplus with the US reflects a large expansion of Vietnam’s export capacity in apparel and technology, and its growing global supply chain integration.

Vietnam’s current account balance has also trended higher over the last decade, rising to a surplus of more than 5% of GDP in the four quarters through June 2018, the report showed.

Vietnam-US Trade in 2001-2015. Source: AmCham Vietnam

The Treasury urges the Vietnamese authorities to enhance the timeliness and transparency of data on foreign exchange reserves, intervention, and external balances.

Countries which are in the list would be viewed for the next two reports. The Treasury will keep an eye on Vietnam’s statistics on trade, current accounts, macroeconomic and currency policies and the department might work with Vietnamese authorities if needed, the Vietnamese government said on its website.

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