U.S., Vietnam Reach Accord on Currency, Easing the Dispute

Ho Chi Minh, former prime minister and president of Vietnam, seen through a loupe, is displayed on a Vietnamese 500,000 dong banknote in an arranged photograph in Bangkok, Thailand. (Photographer: Brent Lewin/Bloomberg)

U.S., Vietnam Reach Accord on Currency, Easing the Dispute

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The U.S. Treasury Department and Vietnam’s central bank said they reached an agreement under which Vietnam will allow more flexibility in its currency, easing a dispute in which the U.S. had discussed whether to impose tariffs on the Asian nation.

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,” the bank and U.S. Treasury said Monday in what was billed as a joint statement released by Treasury.

During the closing days of President Donald Trump’s administration in January, the U.S. Trade Representative labeled Vietnam’s currency actions unreasonable and restrictive to American businesses following a so-called section 301 probe, but refrained from hitting the nation with punitive tariffs. The Biden administration had been facing an imminent deadline for publishing a proposed product list under the probe begun under Trump, according to trade experts.

Virtual Meeting

Vietnam’s central bank has maintained it doesn’t use the exchange rate to create an unfair competitive advantage in international trade. The statement followed a virtual meeting between Treasury Secretary Janet Yellen and State Bank of Vietnam Governor Nguyen Thi Hong.

“I believe the State Bank of Vietnam’s attention to these issues over time not only will address Treasury’s concerns, but also will support the further development of Vietnam’s financial markets and enhance its macroeconomic and financial resilience,” Yellen said.

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 U.S. 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 U.S. that made it a target for Trump; this year it has the largest merchandise gap with the U.S. behind China and Mexico.

United States Trade Representative Katherine Tai welcomed the agreement, she said in a statement.

“USTR, in coordination with Treasury, will monitor Vietnam’s implementation of its commitments and work with Vietnam to ensure that it addresses the acts, policies and practices related to the valuation of its currency that were found actionable in the section 301 investigation,” Tai said.

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