Instant View: US labels Switzerland, Vietnam currency manipulators

NEW YORK: The US Treasury labeled Switzerland and Vietnam as currency manipulators on Wednesday and added Taiwan, Thailand and India to a watch list of countries it suspects of taking measures to devalue their currencies against the dollar.

COMMENTS: KARSKARSTEN JUNIUS, CHIEF ECONOMIST, BANK J.SAFRA SARASIN, ZURICH

"The currency manipulator label was a step by the current US administration to appear tough on trade-related matter, although it would likely have few practical effects.

"With import-, producer-, and consumer prices below last years' levels and the nominal and real effective exchange rates above them the (Swiss National Bank) SNB cannot conduct a different exchange rate policy if it wants to deliver on its mandate. Otherwise it would risk of negative inflation expectations to become entrenched."

"A stronger global economy, however, would naturally reduce demand for a safe haven like the Swiss franc and soften its upward pressure - reducing the need for FX-interventions."

PER HAMMARLUND, CHIEF EMERGING MARKETS STRATEGIST, SEB, STOCKHOLM

"It's part of the US strategy to ramp up pressure on Biden before he takes over the office of president of the United States. You set the agenda and force him into positions that he will have to get out of somehow."

"Especially with Vietnam, there will be some negotiations and probably Vietnam might let its currency appreciate before the next review, before there is any serious risk of sanctions being imposed."

"It's interesting that India is also on the watchlist. Obviously being on the watchlist is not as serious but given the desire to form some kind of counter alliance to China, it's an interesting strategic choice to put India on the list.

If you want to build a coalition and hope for partners in your strategy to handle China then it'll be good to have India on your side in Asia. It's partly a reflection that the Trump Administration will leave a legacy for Biden to handle when he comes into office."

KIT JUCKES, HEAD OF FX STRATEGY, SOCIETE GENERALE, LONDON

"It's kind of been something that has been coming. I don't think it helps the credibility of the concept of currency manipulator in the US designation if you do it in reference to a currency that is wildly overvalued and where it's so obvious.

There is nobody on the planet that doesn't know that the Swiss franc is really expensive - you'd have to have never asked for cup of coffee in Geneva or Zurich not to have spotted this obvious fact."

"It just doesn't change the fundamentals of what's making the Swiss franc strong." JOE TUCKEY, ANALYST, ARGENTEX, LONDON

"In the current context of what is driving FX moves, initial reaction is that this isn't particularly impactful for FX markets, and indeed the reaction in the market would reflect this."

"The US doing this may just mean it becomes a little more difficult for the (Swiss National Bank) to engage in intervention, meaning the CHF could remain slightly firmer. (A weaker CHF in to next year on a reduced requirement for safe haven may naturally weaken the currency anyway, meaning they may be less inclined to). In summary - this isn't big news in my view."