The US Treasury Department and Vietnam’s Central Bank claim they have reached an agreement under which Vietnam will allow more flexibility in its currency. This would ease a dispute in which the US had discussed whether to impose tariffs on the Asian nation.
In a joint statement, the Bank and the US Treasury have stated: The State Bank of Vietnam “will continue to improve exchange-rate flexibility over time, allowing the Vietnamese dong to move in line with the stage of development of the financial and foreign-exchange markets and with economic fundamentals, while maintaining macroeconomic and financial-market stability.”
Vietnam’s Central Bank has maintained it doesn’t use the exchange rate to create an unfair competitive advantage in international trade.
In December, Trump’s Treasury Department separately tagged Vietnam, along with Switzerland, with the currency-manipulator label. Then Biden’s Treasury in April dropped the designation, even as Vietnam, Switzerland and Taiwan met thresholds for the label.
The US is Vietnam’s biggest export market, with the value of shipments doubling over the past five years. But the Southeast Asian country has seen a widening trade deficit with the US that made it a target for Trump; this year it has the largest merchandise gap with the US behind China and Mexico.
