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Treasury Secretary Janet Yellen's second foreign exchange report, yet to be released, risks labeling some US trading partners as currency manipulators, although the department held off from applying that label in its last report.

The foreign exchange manipulator designation is based on three broad criteria: a $20 billion-plus trade surplus with the United States, a current account surplus exceeding 2% of GDP, and currency intervention exceeding 2% of gross domestic product.

The Treasury in April stopped short of formally branding Vietnam, Switzerland and Taiwan as currency manipulators even though they tripped some of its thresholds under a 2015 US trade law. The Trump administration had labeled Switzerland and Vietnam as currency manipulators in December 2020.

In its April report, the Treasury said it found 11 economies warranted placement on its "Monitoring List" of major trading partners.

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There is no automatic punishment resulting from a currency manipulator label, though US law requires Washington to demand negotiations with designated trading partners.

For the next report, originally due on Oct. 15, analysts said the following trading partners are at risk - but doubt they will get the label.


  • Switzerland was labeled a currency manipulator by the Trump administration in December 2020, but was spared being formally branded in Yellen's first report in April.

  • Switzerland is likely to meet all three criteria, although analysts doubt it will be given the designation.

  • Switzerland's bilateral goods trade surplus of $39 billion in the 12 months to June 2021 exceeds the Treasury's threshold, and it has a current account surplus equivalent to 3% of GDP in the 12 months to the end of the second quarter.

  • Although the Swiss National Bank has scaled back its interventions recently, it spent 25.4 billion francs in the 12 months to June 2021 - equivalent to 3.5% of Swiss economic output and more than the 2% limit set by the Treasury.

  • Still, analysts believe Switzerland won't be on the list because the Treasury Department (TD) can also look at other factors like currency development, monetary policy and trade policy action.


  • Taiwan was last formally labeled a currency manipulator by the United States in December 1992. It was put back on the monitoring list in 2020.

  • Taiwan breached all three of the criteria, according to analysts at TD, although they do not expect Taiwan to be labeled a currency manipulator.

  • Taiwan's trade surplus with the United States hit $29.9 billion in 2020, according to official data, almost $7 billion more than in 2019, while the current account surplus last year was around 11% of GDP, exceeding Washington's criterion.

  • In the first nine months of this year Taiwan's trade surplus with the United States hit $17.94 billion, up $5.13 billion on the year-ago period. The current account surplus in the first half of this year reached around 14.6% of GDP.

  • The central bank said in September that in the first half of this year it bought a net $8.73 billion to intervene and "avoid serious disorder" in the currency market. By comparison, the central bank purchased a net $39.1 billion for all of 2020. Analysts at TD said Taiwan's purchases amounted to 7.8% of GDP.

    • The Taiwan dollar's 5.6% gain against the greenback last year was among the strongest in Asia. It is up about 2.5% against the greenback this year and among the best-performing Asian currencies.
  • Taiwan's case is complicated by geopolitical pressures, including heightened military tensions with China, and the island's position as a major exporter of semiconductors that are needed to help ease a supply shortage for US manufacturers.

  • The US is likely to take into account both Taiwan's special economic situation vis-à-vis its booming tech exports and key role in making chips, as well as the need to show US support for Taiwan in the face of Chinese pressure when it comes to making a decision on whether to label it a manipulator.


  • Vietnam was labeled a currency manipulator by the Trump administration in December 2020 but was spared being formally branded in Yellen's report in April.

  • Vietnam met the criteria for its trade surplus with the United States of $83.8 billion and its foreign exchange intervention, 4.1% of GDP, but not on its current account, according to analysts at TD.


  • The Treasury Department under the Trump administration designated China a currency manipulator on Aug. 5, 2019, but in January 2020 Treasury dropped the designation days before the signing of a preliminary agreement to end the China-US trade war.

  • Trade remains a contentious bilateral issue despite a recent bilateral summit between President Joe Biden and Chinese leader Xi Jinping.


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