The US Treasury department has released its November 2024 FX Report with Vietnam still on its currency manipulator watchlist. This puts Vietnam in the company of China, Japan, Korea, Taiwan, Singapore, Vietnam, and Germany.
Vietnam has met two of three of the US Treasury’s currency manipulator criteria. Specifically it has a material current account surplus greater than 3 percent of its GDP (5 percent in the 12 months ended June 30) and a bilateral trade surplus with the US in excess of US$15 billion (US$111.7 billion in the 12 months ended June 30).
Of note, the third criteria is met when net purchases of foreign currency occur in eight out of 12 months that collectively add up to more than 2 percent of an economy’s GDP over the same 12-month period.
With this in mind, Vietnam is currently about US$16 billion short of the three months worth of imports the IMF recommends a country has in its foreign exchange reserves. This would be about 3 percent of Vietnam’s GDP although given the currently weakened dong it seems unlikely the State Bank will look to replenish its reserves any time soon.
It’s also worth noting, the bulk of local media coverage has been framed in terms of Vietnam not being considered a currency manipulator as opposed to focusing on the fact that Vietnam is still on the US treasuries watchlist. For example, the headline on the official government news outlet reads ‘US continues to determine that Vietnam is not manipulating currency’.
See also: Vietnam’s Economy