Currency manipulator

Designations under the 1988 Act

Since the 1988 Act was enacted, the United States Department of the Treasury has designated the following countries as currency manipulators:

• South Korea in 1988.
• Taiwan in 1988 and again in 1992.
• China from 1992 to 1994.
• India was added to the list in 2017 for 'questionable foreign exchange policies'. It had stated that India had increased its purchases of foreign exchange over the last three quarters of 2017, although the rupee still rose in value. India's net purchases of foreign exchange in 2017 as a whole totaled $56 billion (2.2% of GDP).

In May 2019, the US Treasury removed India and Switzerland from its currency monitoring list but China, Japan, South Korea, Germany, Italy, Ireland, Singapore, Malaysia, and Vietnam remained on the list. India was removed from the list after it met one of the three criteria necessary for inclusion on the monitoring list, namely, a significant bilateral surplus with the US. India also reduced its level of foreign exchange reserves, to 0.2% of GDP. An analysis by The Economist in 2017 noted that Switzerland has been manipulating its currency more than China since 2009 and Taiwan and South Korea have been doing so since 2014.

• In August 2019, the Trump administration, as part of the China–United States trade war, again designated China a currency manipulator, a designation not supported by the International Monetary Fund. The designation against China was withdrawn in January 2020 after China agreed to refrain from devaluing its currency to make its own goods cheaper for foreign buyers. The two countries are soon to sign a "Phase 1 U.S.-China trade agreement" that includes a provision that prevents China from manipulating its currency to gain trade advantages.
• In December 2020, the Trump administration designated Switzerland and Vietnam as currency manipulators. In April 2021, the Biden administration redesignated Vietnam and Switzerland; they were removed from the currency manipulator list and moved to enhanced monitoring list.

In December 2020, India, Thailand, and Taiwan were added to the monitoring list. China, Japan, South Korea, Germany, Italy, Singapore and Malaysia continued to be on the list.

Evaluation criteria

Impact on manufacturing

Currency manipulation has a disproportionate effect on the secondary sector of the economy and lobbyists of the U.S. manufacturing sector have regularly referred to China as a currency manipulator. A 2013 analysis by Carlos D. Ramirez found that "an increase of one percentage point in the share of congressional district labor force in manufacturing is associated with a 19.6% increase in the likelihood that the district legislator will label Mainland China a currency manipulator".

Reactions

In 2020, the COVID-19 pandemic has exacerbated U.S. trade deficits with a number of nations, including Switzerland and Vietnam. While the Swiss National Bank continued to practice currency interventions to stop the influx of foreign money during economic crisis, the State Bank of Vietnam as well said that its foreign exchange rate policy "is a way to contain inflation, ensure macro stability and not to create an unfair trade advantage". A senior U.S. treasury official said the US aimed "to resolve our issues" with Vietnam and Switzerland within a year. He added that the Biden administration had not been briefed on the issue, and that "they are not implicated in this."

After the Biden administration moved Switzerland, Vietnam and Taiwan to an enhanced engagement status in April 2021, US treasury officials confirmed that the COVID-19 pandemic has caused massive trade and capital flow distortions, increasing the necessity for currency interventions in those export-oriented countries. Taiwanese and Vietnamese officials welcomed the move not to categorize them as currency manipulators, since US authorities understood their "special situation". Both the State Bank of Vietnam and the Swiss National Bank would continue to practice currency interventions to contain inflation, and ensure macro-economic stability.

References

References

1. Bergsten, C. Fred. (February 25, 2015). "Currency Manipulation: Why Something Must Be Done". [[Forbes]].
2. "OMNIBUS TRADE AND COMPETITIVENESS ACT OF 1988 (H.R. 3) : SEC. 3004. INTERNATIONAL NEGOTIATIONS ON EXCHANGE RATE AND ECONOMIC POLICIES". [[United States Department of the Treasury]].
3. (August 5, 2019). "U.S. designates China as currency manipulator for first time in decades". [[Reuters]].
4. (February 24, 2016). "H.R.644 – Trade Facilitation and Trade Enforcement Act of 2015. 114th Congress (2015–2016), VII, Sec. 701".
5. "Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States". [[United States Department of the Treasury]].
6. "India removed from 'currency manipulation' monitoring list".
7. (May 29, 2019). "US removes India from its currency monitoring list; China, Japan stay". [[Business Standard]].
8. (29 May 2019). "US removes India, Switzerland from its currency monitoring list".
9. (March 2, 2017). "China and currency manipulation: Champs or chumps". [[The Economist]].
10. (August 5, 2019). "Treasury Designates China as a Currency Manipulator". [[United States Department of the Treasury]].
11. "Trump pressured Mnuchin to label China 'currency manipulator', a move he had previously resisted". Washington Post.
12. Palmer, Doug. (9 August 2019). "New IMF report doesn't back Trump's currency manipulation charge against China".
13. (13 January 2020). "US reverses China 'currency manipulator' label".
14. (2020-01-13). "US drops designation of China as currency manipulator".
15. "US removes Vietnam, Switzerland from currency manipulator list".
16. "US lifts Vietnam, Switzerland from currency manipulator list".
17. (16 December 2020). "Trump fires parting shot as US labels Switzerland, Vietnam as currency manipulators".
18. (December 16, 2020). "Treasury Releases Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States". US Department of the Treasury.
19. (June 2024). "Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States". US Department of the Treasury.
20. (April 2021). "Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States". US Department of the Treasury.
21. (December 2020). "Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States". US Department of the Treasury.
22. Ramirez, Carlos D.. (December 2013). "The political economy of "currency manipulation" bashing". [[China Economic Review (journal).
23. Politi, James; Szalay, Eva (December 16, 2020).[https://www.ft.com/content/9bcd4d84-fdec-4f03-9560-dc58f2721899 "US declares Switzerland and Vietnam currency manipulators"] {{Webarchive. link. (2020-12-17 . ft.com.)
24. [https://thegreaterindia.in/news/business/us-treasury-lists-switzerland-and-vietnam-as-currency-manipulators-business-economy-news/ "US Treasury lists Switzerland and Vietnam as forex manipulators."]{{Dead link. (December 2023)
25. [https://www.metro.us/u-s-stops-short-of/ "U.S. stops short of branding Vietnam, Switzerland, Taiwan currency manipulators"] {{Webarchive. link. (2021-04-27 ''metro.us''. Retrieved 27. April 2021.)