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U.S. accuses Switzerland, Vietnam of manipulating currency; Japan, China on monitoring list

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By Heather SCOTT

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U.S. accuses Switzerland, Vietnam of manipulating currency; Japan, China on monitoring list

The country that is printing more money daily than all the others put together (and handing it to their wealthiest citizens) is now threatened by Vietnam and Switzerland? The US govt has no sense of irony.

13 ( +13 / -0 )

Trump just can't handle the fact that the US is going to have deal with the fact that because it uses so much "stuff" imported from abroad, that other countries are going to have trade surpluses.

The US isnt selling what they need or necessarily want!

4 ( +8 / -4 )

I don't put much credence into this last minute gesture by the outgoing administration.

3 ( +6 / -3 )

I don't put much credence into this last minute gesture by the outgoing administration.

Someone needs to tell the world the meaning of "Lame Duck"...... Maybe "Donald Duck" would be better!

5 ( +7 / -2 )

I always assumed the dong was loosely pegged to the US dollar anyway. The pair hasn't changed much over the years.

5 ( +5 / -0 )

Trump just can't handle 

This literally has nothing to do with Trump. It's standard US behavior.

3 ( +4 / -1 )

The VND I'm told is pegged to a basket of currencies but naturally follows the RMB because of trade relationship with China, ie if USA thinks Vietnam is manipulating the VND, then it's a sure sign China is manipulating the RMB.

Like the HKD, the relationship with the USD is complicated, not least because any anticipated move by the VCB to devalue the VND is countered by businesses hoarding USD to preserve purchasing power.

IMHO, Vietnam is such a small fry, its currency is of no importance to trading partners, especially Japan or USA.

China on the other hand, truly manipulate, and they manipulate to avoid perceptions of manipulation.

1 ( +3 / -2 )

Typical Trump and Munchikin financial policy. Blame others for your own failures. Trump's pandemic policy has wrecked domestic production and the number of bankruptcies, unemployed and miles and miles waiting in food lines is a clear indication of the toll it is taking on the U.S. The U.S. is no longer a main player on the world stage, Trump has made sure of that.

4 ( +5 / -1 )

It is the US that has manipulated currency exchange rates and has been doing so since the Reagan administration. Here is how a free trade regime should operate and how the US has turned it upside down.

In a true free trade regime where all currencies are allowed to float, meaning they find their own value in trade without government intervention, there should be no long term trade surpluses or deficits. Short term, yes they will happen but they should be self correcting. Assume nations A, B, C and D are all trading together. Lets say A starts to run a trade deficit with the others. Put another way B, C and D are selling more goods and services to A than A is selling to them. What that implies is that A is paying B, C and D more for what it is buying from them than it receives in remittance for what it sells to them. A's currency will start to pile up in B, C and D while A will experience a shortage of currencies from them. Currencies behave like any other commodity. Since As currency is in surplus it's value will fall relative to the values of the other currencies. Likewise since the currencies of B, C and D are in short supply in A, they are relatively dear and their value will rise. In such a situation, the reduction in the value of As currency reduces the price of their goods in trade, while the rising value of the currencies of B, C and D make their goods more expensive. This change in prices will make As goods more attractive in trade and those from B, C and D less attractive, and this will turn As trade deficit around. This is the self correcting mechanism that should balance trade flows automatically.

However, what happens if A is also running a current accounts deficit? To finance that debt it sells bonds. Many such bonds are bought by As citizens but many are also bought by B, C and D. Why would they do that? It is a way to use up the excess of As currency they earned from their trade surpluses relative to A. In doing so As currency isn't in surplus any more so it doesn't fall in value relative to the currencies of B, C and D. This keeps the terms of trade favorable for B, C and D, perpetuating As trade deficit. A is the US if you haven't figured this out by now. The US budget deficits are what drive its trade deficit. The US hands other nations the means to perpetuate the US trade deficit and then whines that other nations are the ones who manipulate their currency value. It also seems that every trading nation except the US sees right through America's flim-flam and is rightfully indignant when the US whine about currency manipulation or dumping. The American public knows so little about how markets and trade work they are clueless and believe all the bovine excrement coming out of Washington about trade. The only way the US can solve its trade deficit is to run a balance budget or better yet small surpluses for the foreseeable future. It won't and instead will continue to whine about currency manipulation without seeing the irony that infuriates Americas trade partners.

2 ( +3 / -1 )

That’s ironic. All developed countries have been manipulating their currencies. People accuse capitalism as being a “race to the bottom,” but that term would better be applied to government spending. The manipulation of currency values is the result of excessive deficit spending, and increasing the money supply to fund this spending. Weakening the value of currency robs people of the value of their wages and savings, and this value ends up in the accounts of the politically connected.

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While they of course never ever would have manipulated currencies with the dollar at hand as global quasi-standard...lol

0 ( +0 / -0 )

It won't go through. I imagine Swiss will get sanctioned but Vietnam won't - because Swiss has zero political leverage and significance now. Why?

The nightmarish scenario for the West is to see Vietnam and China becoming the old pals of the Soviet era. China and Vietnam controlled all of South China Sea, which Vietnam held the most islands and important corridors to Singapore and Thailand bay. If the US pisses Vietnam, it will fall into the sphere of China. Both China and Vietnam will decide to do naval blockades which will permanently cripple the East Asian economies. Additionally, Vietnam is now the boss of ASEAN and a middle power who will hold the "workshop of the world" secondly after China. With China's help in this scenario, Vietnam will adamantly expel the American influence out of this region. India will be persuaded into the coalition if the Indians will become the next victim of this currency accusation since Vietnam and India are now best pals in the Indo-Pacific. Japan will be the worst victim from all of these!

Yeah, no. The Pentagon and State Department will strike this idiotic accusation down, not legally. They will persuade the Biden administration that it is a horrible idea because China will win if Vietnam and India turn away from the USA due to the currency probes. Decades of mending ties with India and Vietnam against China will turn into wastes!

IMHO, Vietnam is such a small fry, its currency is of no importance to trading partners, especially Japan or USA.

But an important, future ally for the West. Vietnam controls most of the SCS and oceanic corridors to Singapore. Vietnam is also a rising middle power who now dominates over the ASEAN and will soon become the "workshop of the world" second to China. There is a chance that Dong will pose a threat as Yuan in some days. Now, the West needs all helps for the upcoming Cold War.

This literally has nothing to do with Trump. It's standard US behavior.

He was pissed when Vietnam and Swiss congratulated Biden. Trump is doing as much damages as he can before leaving.

5 ( +6 / -1 )

The country that is printing more money daily than all the others put together (and handing it to their wealthiest citizens) is now threatened by Vietnam and Switzerland? The US govt has no sense of irony.

exactly, while quantitative easing while not classifieds as currency manipulation, still has the desired results deflating the strength of your currency. Nobody in 2020 has done more quantitative easing than the US. whats good for the gander is good for the goose. basically the US doesnt have a pot to pee in when it comes to accusing others of currency manipulation

1 ( +1 / -0 )

Maybe if most US businesses didn't manufacture their goods in China, the trade imbalance wouldn't be as large.

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It is because US companies are greedy! The bottom line is everything to them. Then they blame others for their decisions.

3 ( +3 / -0 )

It is because US companies are greedy! The bottom line is everything to them. Then they blame others for their decisions.

Companies don't really have much input. It is really a function of the central banks and their policies. The scale that a central bank can manipulate currencies will bankrupt nearly any company, except maybe Apple.

In a free market, the exchange rates will change with the trade surplus/deficit. If it isn't changing, there is manipulation.

1 ( +1 / -0 )

The nightmarish scenario for the West is to see Vietnam and China becoming the old pals of the Soviet era.

There is virtually no chance of that. The Vietnamese have never trusted China, and have often been at war with it. Yes, the Chinese gave weapons to Hanoi during the war, but Hanoi had little choice. Your fantasy of a tripartite India-Vietnam-China coalition is just that. A fantasy. Nobody trusts the CCP.

-1 ( +1 / -2 )

while quantitative easing while not classifieds as currency manipulation, still has the desired results deflating the strength of your currency.

I think you misunderstand QE. The money supply of the US was in absolute decline from 2009 through about 2011, the first such absolute decline since the Great Depression. As the value of all those Collateralized Debt Obligations (CDOs) collapsed, something like $16-$20 trillion was lost from the US money supply. The US was entering a deflationary spiral though nobody in a policy making position was willing to say this out loud. The great fear was that if the expectation of deflation were to take hold it could overwhelm any policy tools available to the government to reverse the deflation. Economists don't know where the bottom is in a fully developed deflationary spiral and nobody in their right mind wants to risk it. Since Congress at the time was unwilling to engage in fiscal policy, that left the Fed with no choice but to engage in QE. The US and the world still face deflationary pressures btw, which is why all that QE did not cause inflation. It was just barely enough to keep inflation above zero. So no, QE did not deflate the strength of the US currency. It is one of those interesting foibles of human nature that people today still get worked up over inflation when the real danger today is deflation. Oh, and since you mention it, a reduction in the value of the US Dollar in trade is one of the things necessary to reduce the US trade deficit. It has to happen sooner or later. It can be accomplished deliberately in a controlled fashion or it can happen all at once in a crisis but sooner or later it has to happen.

0 ( +0 / -0 )

It is because US companies are greedy! The bottom line is everything to them.

Show us a successful company that isn't focused on profitability. It's the nature of competitive markets. It's what stockholders demand. It is the duty of governments to enforce rules that keep businesses honest and prevent the formation of oligopolies and monopolies. The greater problem is not a focus on profits but when nations do not enforce laws and allow dishonest practices to persist. When that happens doing business honestly becomes less profitable than being dishonest. Honesty is effectively punished and you very quickly see all businesses abandon honesty for dishonesty.

0 ( +0 / -0 )

Maybe if most US businesses didn't manufacture their goods in China, the trade imbalance wouldn't be as large.

Since labor rates and the cost of living are relatively high in the US, manufacturing now conducted in China would mostly move to another low wage country and the trade imbalance would follow. There are lots of low wage developing nations that would dearly love to see some manufacturing move from China to their shores, but most do not have the well developed infrastructure that China has to support business operations.

1 ( +1 / -0 )

There is virtually no chance of that. The Vietnamese have never trusted China, and have often been at war with it.

No one trusts each other. Even Europeans do not like the Americans.

Vietnam was cordial to China before Deng era - China played a huge role during Vietnam War. Deng Xiaoping attacked Vietnam under the influence of the USA. I have to remind you that the USA also supported Pol Pot at that time.

If Vietnam sees benefits in the multipolar world, which they and Russians have been preparing for so long, then they will form an alliance with China and Eurasia to see the West collapsing.

Yes, the Chinese gave weapons to Hanoi during the war, but Hanoi had little choice. Your fantasy of a tripartite India-Vietnam-China coalition is just that. A fantasy. Nobody trusts the CCP.

If the USA becomes a giant douche that acts irrationally, everyone will join Russia and China.

It is not a fantasy. It is a realistic warning from many political analysts since 2016.

2 ( +2 / -0 )

Deng Xiaoping attacked Vietnam under the influence of the USA. I have to remind you that the USA also supported Pol Pot at that time.

This is complete disinformation. There isn't a shred of truth to any of that. You twist history in many devious ways. The US supported it's ally in the Vietnam War, Prince Sihanouk's after he was deposed in a military coup led by Lon Nol. Pol Pot was a long time enemy of Prince Sihanouk and had fought against him since the early 1950s. But Pol Pot was also an enemy of Lon Nol and fought Lon Nol's forces with Vietnamese support after the coup. The US didn't support either side but was supporting those loyal to Prince Sihanouk's. After beating Lon Nol, Pol Pot's forces took control of Cambodia, defeated Price Sihanouk's loyalist forces and Prince Sihanouk fled into exile. Soon after Pol Pot came to power he came into conflict with Vietnam over their border and that is at least one source of their mutual emnity. In addition, China supported Pol Pot as a buffer against Soviet influence in the region. Vietnam was a Soviet ally with a mutual defense pact at the time. The Vietnamese began to fight Pol Pot's forces, eventually defeating them and installing their own ally in Phnom Penh. It was Vietnam's military conquests in Cambodia that threatened China's hegemony there. This is what led to China's 1979 invasion of Vietnam. China was seeking to force the Vietnamese to withdraw from Cambodia. They did not and Cambodia's leadership remains strongly aligned with Vietnam. The US had nothing to do with that. Again, you make lies up out of thin air.

0 ( +0 / -0 )

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