The US Treasury Department has released the report on the macro economies and forex policies of its trade and finance partners. The report is submitted by the department to the US Congress twice a year.

In the January report, China is no longer a ‘currency manipulator’. The department said that during the negotiation for trade agreement, China committed not to devalue the yuan sharply and not to use forex as a tool to obtain trade advantages. However, the country is still included on the monitoring list.

Besides China, other eight countries have been named in the monitor list, including Japan, South Korea, Germany, Italia, Ireland, Singapore, Malaysia, Vietnam (which has been in the list since May 2019), and Switzerland, which has just been added into the list.

In the case of Vietnam, in the four quarters as of June 2019, Vietnam only violated one of the criteria: it has surplus higher than $20 billion in trade with the US (the real figure was $47 billion).

In the case of Vietnam, in the four quarters as of June 2019, Vietnam only violated one of the criteria: it has surplus higher than $20 billion in trade with the US (the real figure was $47 billion).

Meanwhile, the current account surplus was just 1.7 percent of GDP and the foreign currency net purchase was 0.8 percent of GDP (the limit is 2 percent of GDP).

The US Treasury Department said that Vietnam had reason to buy more foreign currencies: to increase the forex reserves, which were still believed at a low level.

The action of the State Bank of Vietnam (SBV) was both bought and sold. The sale of US dollars aimed to prevent the dong depreciation in the second half of 2018.

According to Bao Viet Securities (BVSC), the US Department of Treasury’s January report was prepared on the basis of the information of the four quarters as of June 2019.

BVSC estimated that since June 2019, SBV has bought a big amount of foreign currencies, about $10 billion.

Therefore, BVSC believes that the risk of Vietnam being watched over by the Trump’s administration still exists.

Analysts said that the next report of the US Treasury Department is likely to be released only after six months. During that time, the figures and indexes will change a lot. Meanwhile, Vietnam will have opportunities to have more dialogue with the US to reduce the risk of Vietnam being considered as a currency manipulator.

At the 2020 banking sector conference held on January 2, SBV Governor Le Minh Hung affirmed that SBV never intended to use the forex to obtain advantages over its trade partners and it won’t create an intentional intervention in monetary policies to create favorable conditions to boost exports.

Kim Chi 

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