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The U.S. Department of the Treasury has officially declared that Vietnam “does not manipulate currency” in its recent report, marking a significant development in the economic relationship between the two nations.
This announcement came in the June edition of the “Macroeconomic and Foreign Exchange Policies of Major U.S. Trading Partners” report, where the department commended Vietnam’s management of its monetary and exchange rate policies.
The U.S. Treasury Department assesses potential currency manipulation among major trading partners based on three key criteria:
- Bilateral trade surplus with the U.S.
- Current account surplus
- Unilateral, prolonged intervention in the foreign exchange market.
While Vietnam has been placed on the department’s “monitoring list,” it shares this status with six other economies, including China, Japan, Germany, Malaysia, Singapore, and Taiwan (China). These economies have exceeded the thresholds for bilateral goods surplus and current account surplus criteria.
Vietnam’s economic relationship with the U.S. is significant, as evidenced by its bilateral goods trade surplus of US$103 billion in 2023. This figure positions Vietnam as the country with the third-largest goods surplus with the U.S. Furthermore, Vietnam’s foreign exchange reserves stood at US$88.1 billion at the end of 2023, accounting for 21 percent of its GDP.
The Treasury Department’s monitoring list serves as a tool for ongoing assessment. Once an economy is placed on this list, it remains there for at least two consecutive reports. This approach ensures that any performance improvements are sustainable rather than due to temporary factors. The department also retains on the monitoring list any major U.S. trading partner that accounts for a large and disproportionate share of the overall U.S. trade deficit, even if that economy has not met two of the three criteria outlined in the Trade Facilitation and Trade Enforcement Act of 2015.
This report from the U.S. Treasury Department is a positive signal for Vietnam’s economic policies and practices. It reflects the country’s efforts to maintain fair currency practices and foster transparent economic relationships with its trading partners, particularly the United States.
The acknowledgment that Vietnam does not manipulate its currency could have several implications:
- Enhanced economic trust: This declaration may boost investor confidence in Vietnam’s economy and financial markets.
- Improved diplomatic relations: The report could contribute to stronger economic ties between Vietnam and the United States.
- Potential for increased trade: With concerns about currency manipulation addressed, there may be fewer barriers to expanding trade between the two nations.
While the report is positive, Vietnam’s presence on the monitoring list indicates that its economic practices will continue to be closely observed.
In conclusion, the U.S. Treasury Department’s report serves as an important affirmation of Vietnam’s currency practices. As Vietnam continues to grow as a significant player in global trade, particularly with the United States, this recognition of its fair practices could pave the way for further economic cooperation and development.
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