Treasury calls out 3 nations in currency report

The Treasury Department said Friday that it was putting Taiwan, Vietnam and Switzerland on notice over their currency practices, but it struck a more conciliatory tone than the Trump administration by stopping short of labeling any of them a currency manipulator.

The announcement came in the department’s first foreign exchange report under Secretary Janet Yellen. The report, which the department submits to Congress twice a year, aims to hold the U.S.’ top trading partners accountable if they try to gain an unfair advantage in international commerce through practices such as devaluing their currencies.

Being labeled a currency manipulator requires a trading partner to enter into negotiations with the U.S. and the International Monetary Fund to address the situation. The blemish is somewhat symbolic but can lead to tariffs or other retaliation if talks collapse.

Switzerland and Vietnam had been on the list of currency manipulators after the Trump administration added them last year, and their removal Friday means no country currently faces that designation. Still, the Treasury Department said there were signs that Switzerland, Vietnam and Taiwan were improperly managing their currencies.

“Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage,” Yellen said in a statement.

The decision is the latest attempt by the Biden administration to deescalate tension with U.S. allies after four years of former President Donald Trump’s confrontational approach to international economic diplomacy. It also steers the U.S. away from Trump’s fixation on bilateral trade imbalances, taking a more holistic view of trade relationships.

The report said Taiwan’s central bank “continues to actively intervene in the foreign exchange market” and that “less formal exchange rate management practices” had prevented the Taiwanese dollar from fully reflecting macroeconomic fundamentals.

The Treasury Department did not label China a currency manipulator, instead urging it to improve transparency over its foreign exchange practices.

The department kept China, Japan, South Korea, Germany, Italy, India, Malaysia, Singapore and Thailand on its currency monitoring list, and it added Ireland and Mexico.