More Asian countries thick-skinned about FX manipulator tag

[snoop1130]

 

HANOI/SHANGHAI, April 13 (Reuters) - A larger number of Asian countries and economies could join the ranks of those branded currency manipulators by the U.S. Treasury in the coming days, and yet that prospect is barely causing any concern in the region.

 

The U.S. Treasury’s semi-annual assessment of countries it deems are outright manipulators or should be on watch-lists for such behaviour is due as soon as this week.

 

Vietnam, which was named a manipulator for the first time in Treasury’s December report, appears to have continued intervening in currency markets and may stay on the list.

 

Thailand and Taiwan could also be named as manipulators this time. Others, including China, Japan, South Korea, Germany, Italy, Singapore, Malaysia and Hong Kong, are likely to join or remain on the Treasury’s ‘monitoring list’ of countries that meet some of the criteria for being labelled as currency manipulators. “With most of the U.S. major trading partners in Asia either being labelled a manipulator or on the monitoring list, there is now less stigma associated with being called out by the U.S. Treasury,” said Khoon Goh, head of Asia research at ANZ in Singapore.

 

A 2015 U.S. law which can lead to sanctions, bases the manipulator designation on three criteria - a $20 billion-plus trade surplus with the United States, currency intervention exceeding 2% of gross domestic product and a current account surplus exceeding 2% of GDP.

 

The label of currency manipulator does not automatically bring any punishment, however, and the U.S. law only requires Washington to demand negotiations with designated countries.

 

The April report will be the first since Janet Yellen was appointed by U.S. President Joe Biden to lead the Treasury.

 

While not counting on it, analysts such as Goh wonder if the new administration will make allowances for the effects of the coronavirus pandemic, loose U.S. monetary policies and the U.S.-China trade war in distorting trade balances and currency values in Asia.

 

“We doubt that the U.S Treasury will get far from their bilateral engagements unless there is recognition of the role that U.S. policies have played in the first place,” ANZ’s Goh said in a note.

 

LEVERAGE

 

The Treasury allows itself plenty of discretion. China, for instance, became the first country to be properly named a manipulator at the height of the trade war in 2019, even though it didn’t meet all the three criteria.

 

This time, despite a massive current account surplus in 2020, China’s FX reserves have barely risen. The yuan has steadied over the past six months, and rising dollar balances at local banks have analysts suspecting that they are massaging the flows in the central bank’s stead.

 

Switzerland, a first-time manipulator in the December report, could escape that tag because it appears to have scaled-back intervention this year, although it might remain on the monitoring list.

 

Vietnam has benefited from a shift in exports and manufacturing of electronics and other goods from China after its trade war with Washington. Since December, when it was labelled a currency manipulator, Vietnam’s central bank has used special currency swaps to keep its dollar-buying intervention off the books for a while.

 

Nguyen Tri Hieu, a former Vietnam government advisor, believes authorities in the Southeast Asian country do worry about the possible damage to its reputation and exports from being named a manipulator.

 

“I don’t think Biden administration would remove Vietnam from the currency manipulator list in the short term. Instead, the U.S. will use it as leverage in further negotiations with Vietnam, but no sanctions or taxes will be levied,” Hieu said.

 

Policymakers in Taiwan say they have observed that countries already tagged by the United States, such as Vietnam, have not felt any impact.

 

“In fact, currency intervention in small and open economies is like other countries’ quantitative easing - they are all important monetary policy tools for the central banks to achieve their legally defined missions,” Taiwan’s central bank said. 

 

-- © Copyright Reuters 2021-04-13

 

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[ukrules]

Didn't they just mint $2 Trillion out of thin air in the US?

 

Pure manipulation, one day, perhaps sometime soon people will stop listening to them.

[tgw]

it's just another thing that is OK when done by the US, but when others do the same, the US boos them...

 

double standards

[RichardColeman]

 

9 hours ago, snoop1130 said:

Others, including China, Japan, South Korea, Germany, Italy, Singapore, Malaysia and Hong Kong

 

9 hours ago, snoop1130 said:

already tagged by the United States, such as Vietnam, have not felt any impact.

Seems to include everybody America has had a war with in the last 80  years. Co-incidence ? 

[wadman]

4 hours ago, tgw said:

it's just another thing that is OK when done by the US, but when others do the same, the US boos them...

 

double standards

 

One the criteria is "a $20 billion-plus trade surplus with the United States".  Since you can't have a trade surplus with yourself, the US cannot be a currency manipulator.  Must be nice to be judge, jury and executioner.  And yet, some countries are still dumb enough to support them.

 

[Jeffr2]

2 hours ago, RichardColeman said:

 

 

Seems to include everybody America has had a war with in the last 80  years. Co-incidence ? 

Not really.  Many on that list are now very close allies of the US.  Currency manipulation is done by pretty much every country.  One way or another.  The US for sure is guilty of this.

[fangless]

13 hours ago, snoop1130 said:

Thailand and Taiwan could also be named as manipulators this time. Others, including China, Japan, South Korea, Germany, Italy, Singapore, Malaysia and Hong Kong, are likely to join or remain on the Treasury’s ‘monitoring list’ of countries that meet some of the criteria for being labelled as currency manipulators

Why is Germany on the list.  It is now using the Euro so surely all the Euro currency countries should be on it if they are!

[canopus1969]

4 minutes ago, fangless said:

Why is Germany on the list.  It is now using the Euro so surely all the Euro currency countries should be on it if they are!

Sloppy journalism 

[VocalNeal]

Surely the currency is sovereign like the country. Why shouldn't they be allowed to protect their currency?

[mvdf]

And of course it's just that one and only country, the US, labeling the rest of the planet with that currency manipulator tag. 

 

A pernicious bully. A pathological meddler. A hypocrite of the worst sort.  

[GreasyFingers]

15 hours ago, snoop1130 said:

a current account surplus exceeding 2% of GDP.

The US is just jealous of the countries that have any trade surplus.

[Caldera]

The biggest currency manipulators on the planet are the Fed and the US Treasury. The hypocrisy is strong with them.

[Bradmeister]

Most of you seem to be forgetting the world is based on the standard of US dollar. 

 

If manipulation takes place.... which is a constant.... other nations are the ones who lose.  Not the US.... 

 

[webfact]

Treasury’s FX report preview: Taiwan and Thailand dangerously in “manipulators” zone

Author Francesco Pesole

 

 

The semi-annual FX Report (the first one under Yellen) should be released in the coming days by the US Treasury. We estimate that in 2020 Taiwan and Thailand – along with the already labelled Switzerland and Vietnam - both met the three criteria (which might be loosened, reversing a move by Trump) and may be labelled currency manipulators

 

FX Report: Time to estimate the Yellen “touch”

 

The US Treasury’s semi-annual Report to Congress on “Macroeconomic and foreign exchange policies of major trading partners of the United States”, also known as the FX Report, is expected to be published in the coming days. It will be the first one under the new US administration and under the new Treasury Secretary Janet Yellen.

 

In our 23 March article “Taking a peek at Yellen’s foreign FX agenda” we discussed what key themes are set to be dominant for the new administration when it comes to addressing FX manipulation of US trading partners. In this article, we try to estimate the content of the Spring edition of the FX Report and what countries may either receive the manipulation tag or face advanced scrutiny by the Treasury by being added in the Monitoring List.

 

Full story: https://think.ing.com/articles/treasurys-fx-report-preview-taiwan-and-thailand-dangerously-in-manipulators-zone

 

-- © Copyright Thing.Ing 2021-04-15

 

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[fvw53]

On 4/14/2021 at 4:14 AM, RichardColeman said:

 

 

Seems to include everybody America has had a war with in the last 80  years. Co-incidence ? 

How could Germany and Italy be currency manipulators : they use the Euro together with 15 other EU member states

[micmichd]

1 hour ago, fvw53 said:

How could Germany and Italy be currency manipulators : they use the Euro together with 15 other EU member states

You know how the Euro was set up? 

You know how many countries fulfilled the Maastricht criteria, the entrance card to the Eurozone? 

Not even Germany where the then finance minister Theo Waigl had to sell hot air (3G licenses) to get money in the coffers. 

And then came 2014 when the non-elected ECB in Frankfurt printed money like hell (quantitative easing). 

[ukrules]

1 hour ago, micmichd said:

And then came 2014 when the non-elected ECB in Frankfurt printed money like hell (quantitative easing). 

$2 Trillion dollars, there is no moral high ground when you do that.

 

I'm not saying they're wrong to do it, it fixes a need so they do what they need to do, what they don't seem to care about is that other countries also have needs.

[micmichd]

2 hours ago, ukrules said:

$2 Trillion dollars, there is no moral high ground when you do that.

 

I'm not saying they're wrong to do it, it fixes a need so they do what they need to do, what they don't seem to care about is that other countries also have needs.

The ECB has only one obligation : to keep the currency (Euro) stable, where conversion rates are part of the currency. In 2014 they failed in doing so, in this year my EUR pensions in Thailand (as well as other Euro pensioners' in Thailand) were depreciated against the THB. In 2014 ECB installed an Asset Backed Security Purchase Program without having any assets (aka land) to pawn.

And, you're right, they don't care about other countries at all nor for anyone that leaves the Eurozone. 

[ukrules]

1 hour ago, micmichd said:

And, you're right, they don't care about other countries at all nor for anyone that leaves the Eurozone. 

 

The 'they' which to which I'm referring is the US.

 

[tgw]

7 hours ago, fvw53 said:

How could Germany and Italy be currency manipulators : they use the Euro together with 15 other EU member states

 

Germany benefits massively from the Euro, because a stable currency benefits to countries with strong industry and strong exports, with high industrial productivity.

 

Before the Euro, currencies of countries with positive cash balances would rise in value vs. currencies of countries with negative cash balances. Older people here active in economics will remember how the European Monetary System always had to "re-evaluate" the Deutsche Mark every 3 or 4 years - upwards every time.

 

Now, the export currency of German industry stays cheap, so it keeps it competitive advantage within the EU, and also outside of the EU, because PFIIGS are doing so bad and pull the global EUR value down.

 

That's why Mario Draghi and others cried out about the "unfairness" of the German cash balance, while PFIIGS are throwing money out of the windows for social programs and worktime reductions while punishing local industries hard with more and more taxes and social costs. go figure.