Thailand said to be vetted for US currency manipulation

Thailand said to be vetted for US currency manipulation

Vietnam, Indonesia and Malaysia also at risk

A woman rides a motorcycle as she passes containers at Hai Phong port, Vietnam, on Sept 25 last year. (Reuters photo)
A woman rides a motorcycle as she passes containers at Hai Phong port, Vietnam, on Sept 25 last year. (Reuters photo)

WASHINGTON: Thailand risks being added to the US' expanded watch list of currency manipulators after Washington lowered the bar for foreign governments to come under scrutiny, according to Bloomberg reports.

The Trump administration will expand the number of countries it scrutinises for currency manipulation in an upcoming report, people familiar with the matter said, 

So far, Treasury has examined its 12 largest trade partners and Switzerland. An expanded watch list could include Russia, Thailand, Indonesia, Vietnam, Ireland or Malaysia, all of which have large trade surpluses with the US.

Vietnam may be named a manipulator outright for artificially holding down the value of the dong, the people said, after meeting all three criteria the Treasury Department uses to test for currency interventions. Internal debate is continuing over the issue and the administration has asked Vietnam to disclose more information before it releases the report.

Treasury issues a report twice annually on foreign currencies. In the latest report, expected this month, the number of countries whose currency practices the US examines for possible manipulation will rise to about 20, from 12, according to people familiar with the matter.

The number increased after Treasury reduced one of the three criteria it uses to test for manipulations — current account surplus, which captures the difference between the amount a country exports and imports, the people said. The criteria was reduced to a surplus of 2% of gross domestic product from 3%.

In addition to current account surplus, the criteria to assess if a country is interfering in its currency value are a minimum $20 billion trade surplus with the US and repeated interventions in currency markets.

The people asked not to be identified because the report hasn’t yet been issued and they were not authorised to speak publicly about it.

President Donald Trump has in the past tweeted that China, Russia and the European Union all manipulate their their currencies to gain an unfair trade advantage over the US. He vowed on the campaign trail to label China a currency manipulator on his first day in office. But Treasury Secretary Steven Mnuchin has yet to do so because he has said Beijing doesn’t meet criteria set by Congress.

Russia and the EU also have not been officially designated currency manipulators. The label has no practical effect, other than requiring the US to engage in negotiations with offending countries, but would have market repercussions for any government named a manipulator.

Currency policy has been a central tenet of trade deals that Mr Trump has struck with Mexico, Canada and South Korea, and it’s expected to be part of an agreement with China, should one be reached.

Treasury’s latest report is also expected to remove India and South Korea from its watch list for foreign-exchange practices of countries it monitors closely.

A Treasury spokesman declined to comment on specifics of the report ahead of its release.

The report was officially due to Congress in April. Mr Mnuchin had initially expected to meet that deadline and had submitted the completed report to the White House for sign-off in early April, but it has since been delayed, according to two of the people. A spokesman said the Treasury Department has full control of the report and no officials outside the agency had influenced it.

The US has not labelled a major trade partner a currency manipulator since 1994.

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