The United States accuses Switzerland and Vietnam of no longer keeping their national currencies artificially cheap. In December, when Donald Trump was still the US president, the two countries were still labeled as a manipulator of exchange rates.
The US Treasury Department now writes in its semi-annual report on trading partners’ currency policies that Switzerland and Vietnam meet the criteria for currency falsification. Further investigation would have shown that there was no question of manipulation.
The US regularly investigates whether the policies of its 20 largest trading partners amount to manipulation of exchange rates. If, among other things, the trade surplus with the US exceeds a certain limit and a country buys a relatively large amount of foreign currency, it comes into the picture as a possible manipulator.
In addition to Switzerland and Vietnam, Taiwan also met these criteria, but according to the Ministry of Finance, none of those three countries is guilty of manipulation. Washington also points to the disruptive effect of the corona pandemic in 2020, which forced central banks and governments to support their own economy.
Amazement at the accusation against Switzerland
The December accusation against Switzerland was astonishing. The Swiss franc is seen as a safe haven for investors during crises. The Swiss central bank also firmly denied keeping the national currency artificially cheap.
According to critics, investigations into possible price manipulation under Trump were politicized. For example, his government labeled China as a manipulator of exchange rates in 2019, but the US withdrew that accusation in early 2020 as part of a trade deal.
The stamp of a manipulator does not immediately lead to harsh sanctions for trading partners. The law does require the US government to consult with countries accused of currency manipulation.
The US also maintains a list of countries that are extra closely monitored because of their currency policies. At the moment, China, Japan, South Korea, Germany, Ireland and Mexico, among others, are under a magnifying glass.