Vietnam seeks no unfair trade advantage: central bank

The State Bank of Vietnam (SBV) said in a statement Wednesday that it would cooperate with the U.S. in providing data on its currency and macroeconomic policies, if needed.

It also said it would continue to manage the Vietnamese dong flexibly without seeking unfair trade advantage over other countries.

The central bank’s statement came after the U.S. Treasury added Vietnam and eight other countries to a currency manipulation watchlist on Tuesday.

Although Vietnam was not labeled a currency manipulator, it is now being monitored for two criteria: a high trade surplus with the U.S. and a current-account trade surplus with the behemoth.

Economist Nguyen Tri Hieu told VnExpress International that being in a watchlist is a warning for Vietnam, meaning that the Trump administration thinks Vietnam is seeking to gain undue advantage by having a trade surplus with the U.S.

Vietnam’s trade surplus with the U.S. has risen over the last decade to reach $40 billion in 2018, according to the U.S. Treasury.

Vietnam’s official data shows that its exports to the U.S. rose 28 percent in the first five months this year against the same period last year as the U.S.-China trade spat continues without an end in sight.

Any steep fall in the value of the dong could end up with Vietnam being officially labeled a currency manipulator, Hieu said.

Since earlier this year, the SBV has been weakening the dong, letting it slide by 1 percent.

“Vietnam needs to make sure that the dong depreciation is kept lower than 3 percent this year. If it falls further, it could be officially labeled a currency manipulator,” Hieu specified.

The U.S. Treasury has excused Vietnam’s recent currency intervention, saying that Vietnamese authorities have credibly conveyed a “reasonable rationale” for rebuilding reserves.

U.S. Treasury Secretary Steven Mnuchin said in tweet last week that he had a “productive meeting” with Vietnam’s Deputy Prime Minister Pham Binh Minh about economic and trade relations.

Economist Le Dang Doanh said the meeting was a good move from Vietnam and the country needs to be more open with its monetary policy.

“The U.S. and other countries want to know more about Vietnam’s monetary policy, and Vietnam needs to be more transparent in this matter,” he said.

The U.S. labels a country as a currency manipulator if it meets two of the following three criteria: a current account surplus with the U.S. equivalent to 2 percent of gross domestic product (GDP); a trade surplus of at least $20 billion; and persistent market intervention on behalf of the nation’s currency.

Vietnam has met two of the three criteria, having a trade surplus with the U.S. that has risen over the last decade to reach $40 billion in 2018, twice the threshold of $20 billion. Vietnam’s current account balance with the U.S. has also been rising over the last decade, reaching a surplus of more than 5 percent of the GDP in the four quarters through June 2018, more than double the threshold of 2 percent, the U.S Treasury said.

The eight other countries in the monitoring list are China, Japan, South Korea, Germany, Italy, Ireland, Singapore and Malaysia.