The United States accuses Switzerland and Vietnam of stopping artificially holding their national currencies. In December, when Donald Trump was still president of the United States, the two countries were still categorized as exchange rate manipulators.
The US Treasury now writes in its bi-annual currency policy report for trading partners that Switzerland and Vietnam meet the criteria for counterfeiting. Further investigations would have shown that there was no fraud.
The United States regularly checks whether the policies of its 20 largest trading partners amount to exchange rate manipulation. If, among other things, a trade surplus with the United States exceeds a certain limit and a country buys a relatively large amount of foreign currency, it appears in the picture as a potential manipulator.
In addition to Switzerland and Vietnam, Taiwan also met these criteria, but according to the Ministry of Finance, none of these three countries is guilty of manipulation. Washington is also indicating the devastating impact of the Corona epidemic in 2020, forcing central banks and governments to shore up their economy.
Surprised by the accusation against Switzerland
Switzerland’s indictment in December was astonishing. The Swiss franc is seen as a safe haven for investors during crises. The SNB also vehemently denied keeping the national currency artificially cheap.
According to critics, investigations into possible price gouging in the Trump era have been politicized. For example, his government described China as manipulating exchange rates in 2019, but the United States withdrew the accusation in early 2020 as part of a trade deal.
Sealing the manipulator does not immediately result in heavy penalties for trading partners. The law requires the US government to consult with countries accused of currency manipulation.
The United States also maintains a list of countries that are closely monitored due to their currency policies. At the moment, China, Japan, South Korea, Germany, Ireland and Mexico, among others, are subject to a magnifying glass.