US adds Taiwan, Vietnam to currency monitoring list

Washington also will continue “closely monitoring” China’s actions and again raised concerns about Beijing’s “lack of transparency” in its moves to influence currency markets, Treasury said in its semi-annual US report to Congress

The report looks at countries with large trade surpluses and which actively intervene in foreign exchange markets to keep their currencies from appreciating, which makes their exports more competitive.

Treasury put 12 economies on the monitoring list: China, Japan, Korea, Germany, Italy, India, Malaysia, Singapore, Thailand, Taiwan, Vietnam and Mexico.

Two countries — Ireland and Switzerland — were removed from the list since the December report. Switzerland had been declared a currency manipulator in December 2020, and continues to be subject to “enhanced” discussions.

Beijing has long been a target of scrutiny, and Washington has frequently accused the government of keeping the exchange rate artificially low via its massive stockpile of US dollars, undermining US manufacturers and workers.

“China’s failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism make it an outlier among major economies, and the activities of China’s state-owned banks in particular warrant Treasury’s close monitoring,” Treasury said in the report.

China’s renminbi appreciated 4.4 percent against the US dollar in real terms, and continued to strengthen early this year until April, when it weakened rapidly due to the “darkening growth outlook,” the report said.

A Treasury official noted that the country “faces some unique challenges” such as inflows of cash seeking a safe haven, including “when Russia’s war against Ukraine started.”

“We continue to discuss these issues,” the official told reporters.

With Switzerland, “we also have a new standing macroeconomic and financial dialogue” to deal with the issues, the official said.

Treasury reviewed 20 major US trading partners with bilateral goods trade with the United States of at least $40 billion annually.

The criteria are a large trade surplus with the United States, a significant current account surplus and evidence of “persistent, one-sided intervention” in foreign exchange markets.