Vietnam Welcomes Biden... Will It Escape Currency Manipulator Status?

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[Asia Economy Hanoi Correspondent Jo Ara] Attention is focused on whether Vietnam will be able to escape allegations of currency manipulation following the change of administration in the United States. Vietnam has been suspected of currency manipulation by the Donald Trump administration due to its increasing trade surplus, but with U.S. President-elect Joe Biden expressing his intention to restore relations with allies, there is hope for improvement.

According to local media on the 17th, there is speculation in Vietnam that the country may be freed from currency manipulation suspicions following Biden's election victory. Professor Salvatore Baibons of the University of Sydney, Australia, said in an interview with local media, "The issue of currency manipulation was a unique weapon wielded by the Trump administration," and predicted, "It seems unlikely that President-elect Biden will use it." He advised, "If Vietnam presents more concrete data related to foreign exchange reserves and exchange rate policies and explains them effectively, it could be cleared of currency manipulation allegations."

Dang Hoang Hai An, a visiting professor at Indiana University, predicted that since President-elect Biden supports global trade, he is unlikely to apply pressure like President Trump did. Professor Nguyen Xuan Than of Vietnam Fulbright University analyzed, "If pressure regarding currency manipulation decreases, Vietnam's economic risks next year will also significantly decline."

Vietnam has been suspected of currency manipulation due to the massive scale of its trade surplus. According to statistics from the Vietnam Customs Department, the trade balance recorded a surplus of $2.5 billion in August, and the surplus from January to August this year reached $10.93 billion. Accordingly, foreign exchange reserves also reached a record high of $92 billion. This far exceeds the $84 billion announced by Le Minh Hung, Governor of the State Bank of Vietnam. Prime Minister Nguyen Xuan Phuc stated in this regard, "Vietnam's foreign exchange reserves will increase to $100 billion by the end of this year."

The Trump administration viewed Vietnam's increasing trade surplus as being achieved through currency manipulation. The U.S. Treasury Department had already designated Vietnam as a currency manipulation suspect country last year, and President Trump fiercely criticized Vietnam for troubling the world.

The U.S. Department of Commerce announced earlier this month that it would raise the preliminary countervailing duty rate on Vietnamese tires from 6.23% to 10.08% due to undervaluation of the currency. As a result, Vietnamese passenger car and light truck tires worth $469.6 million are expected to be subject to additional tariffs.

Some expect that with the inauguration of the Biden administration, Vietnam will continue to benefit amid U.S.-China tensions. The outlook is that the longer tensions between the U.S. and China persist, the more companies will choose Vietnam as a safe haven.

This content was produced with the assistance of AI translation services.