The State Bank of Vietnam's headquarters in Hanoi.

As such, TPP members are on the way towards higher standards on exchange rate policies, committing not to use local currencies as a tool to improve competitiveness.

The newswire said the agreement would be signed together with TPP.

Bloomberg has also quoted its sources as saying that Vietnam and Malaysia, two export-oriented economies, have committed not to devalue local currencies to boost exports.

A member of the Vietnamese TPP negotiation team on October 7 affirmed that there had not been firm commitment among 12 TPP countries on the issue.

Apress release by the US Government on October 5 did not mention the issue, but only showed the general statement that 12 countries have reached consensus on macroeconomic cooperation, including exchange rate policies. 

Meanwhile, a source told VnExpress that TPP member countries pledging not to devalue local currencies was one of the requests raised by US President Obama’s administration to pave the way for the US Congress to ratify TPP.

“The issue was raised by the US at the TPP negotiators’ August meeting. The US asked the other 11 member countries to discuss a mechanism which prevents currency manipulation among TPP members,” the source said.

“The central banks of 12 TPP countries are still considering the issue,” the source added.

Currency manipulation, explained the source, occurs when the central banks of nations use exchange rate policies as tools to make their export products more advantageous.

The 12 TPP member countries still have not made any official agreement, but it was put into discussion. 

The State Bank is always under pressure as economists and exporters repeatedly urge it to devalue the dong to help boost exports.

An expert said that even if such an agreement is not signed, Vietnam should not consider local currency devaluation as the magic wand to boost exports. 

“The exchange rate policy adjustment should target different purposes which aim to harmonize the benefits of the national economy, and not just be a tool to boost exports,” he said.

After five years of negotiations with countless disagreements and obstacles, trade ministers of 12 TPP member states reached the final consensus on the world’s largest free trade agreement on October 5 evening. Before the agreement is officially signed, TPP must be approved by the heads and parliaments of the 12 member states countries.

VNE