April 15 (Reuters) – Treasury Secretary Janet Yellen’s first foreign exchange report due for release this week could see some US trading partners being labeled as currency manipulators.
This determination is based on three broad criteria here A $ 20 billion-plus trade surplus with the United States, current account surpluses exceed 2% of GDP and currency interventions exceed 2% of gross domestic product.
Those criteria led the Trump administration to label Switzerland and Vietnam as currency manipulators in December.
Whether Yellen is taking his predecessor’s aggressive approach to scolding trading partners is unclear.
This time, analysts said the following was risky.
* Switzerland was named by the US Treasury a currency manipulator in its December report after meeting all three criteria.
* For 2020, Switzerland has a goods trade surplus of 28 billion Swiss francs with the US, according to data from the Swiss customs office. The United States is Switzerland’s second largest trading partner after Germany.
* SNB currency intervention in 2020 is equivalent to 15.6% of Swiss GDP, well above the US threshold of 2%.
* The SNB appears to have reduced its intervention so far in 2021 as the franc has weakened, but Chairman Thomas Jordan said in March “absolutely no change in our monetary policy, so our willingness to intervene in the foreign exchange market if necessary is appropriate. same.”
* Taiwan’s trade surplus with the United States reached $ 29.9 billion in 2020, according to official data, nearly $ 7 billion more than in 2019, while last year’s current account surplus was around 11% of GDP, exceeding Washington’s criteria.
* The Taiwan dollar’s 5.6% rise against the dollar last year was one of the strongest in Asia and remains a strong performer this year.
* The central bank said it intervened up to $ 39.1 billion last year as it stepped up efforts in November and December to “avoid serious disruption”.
* The island was last officially labeled a currency manipulator by the United States in December 1992. It was re-entered on the watch list in 2020.
* The US trade deficit with Vietnam widened to $ 63.36 billion in 2020 from $ 46.90 billion in 2019, according to Vietnamese government customs data. The deficit widened even further in the March quarter.
* The central bank bought a net $ 21 billion last year to increase currency reserves to about $ 100 billion. US Trade Representative Katherine Tai, in a telephone conversation earlier this month with Vietnam’s industry and trade minister, highlighted US concerns about Vietnam’s currency practices.
* The baht has come under pressure in recent months as the novel coronavirus pandemic has devastated the prospects for a tourism-dependent economy. It is likely to fall even further in 2021 thanks to a much smaller current account surplus.
* Thai officials say they will take steps to ensure the currency will not hinder the economic recovery. As of April 2, foreign reserves totaled $ 245.7 billion while the net front was $ 33 billion.
* The US Treasury may change the threshold for the criteria used to determine whether a country is manipulating its currency. The threshold was last changed in May 2019 under the Trump administration to make it easier for Washington to label countries as currency manipulators.
* A number of countries are expected to remain or appear on the “watch list,” according to Win Thin BBH, including China, Germany, Japan, Italy, India and Singapore. The yuan remains one of the strongest performers versus the greenback this year. ($ 1 = 0.8830 Swiss francs)
Reporting by Ben Blanchard in Taipei, Khanh Vu in Hanoi, John Revill in Zurich; Orathai Sriring in Bangkok; David Lawder in Washington Compiled by Angel Chatterjee in London; Edited by Megan Davies and Alistair Bell