Wednesday December 16, 2020
USA sees unfair competition
Switzerland classified as a currency manipulator
The US accuses Switzerland of keeping its currency artificially low in order to promote its exports. Together with Vietnam, the Alpine republic is now on the list of currency manipulators. Germany is also under observation.
The US has officially accused Switzerland and Vietnam of currency manipulation. The US Treasury Department accused the two states of intervening in the money markets in a semi-annual report. In the case of Vietnam this is done with the aim of “gaining an unfair competitive advantage in international trade”.
Germany, China, Japan, South Korea and other states remain on a list of countries that are under US surveillance without being accused of currency manipulation. India, Taiwan and Thailand were added. In the six-month report, the US Treasury Department examines the economic policies and monetary practices of 20 of its largest trading partners.
The results of the analysis do not trigger sanctions, but it is likely that the US will increase pressure on country governments to change their policies. The outgoing US President Donald Trump has repeatedly accused other states of keeping their currencies artificially low in order to promote their exports. The US trade deficit with many countries has long been a thorn in the side of Republicans.
Switzerland remains on course
The Swiss central bank defends itself against the accusation of the USA. The interventions of the Swiss National Bank (SNB) on the foreign exchange market did not serve the purpose of preventing balance of payments adjustments or to gain unfair competitive advantages for the Swiss economy, the central bank said in a statement. Foreign exchange market interventions are necessary in the context of monetary policy in order to guarantee appropriate monetary framework conditions and thus price stability.
In terms of monetary policy, the classification by the US Treasury Department does not change anything. In view of the economic situation and the continued high valuation of the Swiss franc, the SNB is still prepared to intervene more strongly in the foreign exchange market.