WASHINGTON, Nov 10 (Reuters) – The U.S. Treasury Department said on Thursday that no major U.S. trading partner had manipulated its exchange rates to gain an unfair competitive advantage until June 2022, but said it would remain in close contact with Switzerland on its monetary practices.
The bulk of the interventions seen were aimed at strengthening currencies, not weakening them, the Treasury said in a semi-annual report, while acknowledging that emerging and developing economies may need a range of approaches – including intervention – to respond to current global economic conditions.
A senior Treasury official told reporters that the dollar’s strength against other currencies could begin to wane as the Federal Reserve’s monetary tightening peaks and other central banks catch up.
“The global economy was already facing supply and demand imbalances caused by COVID-19 before Russia’s illegal war against Ukraine, which drove up the prices of food, fertilizers and energy, further increasing global inflation and increasing food insecurity,” Treasury Secretary Janet Yellen said. said in a statement, adding that country responses could affect currencies.
“The Treasury recognizes that a range of approaches by developing and emerging economies to headwinds in the global economy may be warranted in certain circumstances,” she added.
The report notes that Switzerland has once again exceeded US thresholds for possible currency manipulation under a 2015 US trade law, but refrained from calling it – or any other country – a currency manipulator. currencies.
The Treasury said it would continue an in-depth analysis of Switzerland’s macroeconomic and exchange rate policies, while establishing an enhanced bilateral engagement that began in early 2021 to discuss Swiss policy options to address external imbalances.
The Treasury said seven economies were on its “watch list” – China, Japan, Korea, Germany, Malaysia, Singapore and Taiwan.
Vietnam was removed from the list, he said, adding that he remained satisfied with the Asian country’s progress in addressing US concerns over its monetary practices. India, Italy, Mexico and Thailand were also removed from the list, the Treasury said.
The Treasury report again called out China for its failure to publish its foreign exchange interventions and the broader lack of transparency around key features of its exchange rate mechanism.
A senior Treasury official said efforts by the US Treasury and the International Monetary Fund have so far made no progress with Beijing on the issue.
The Treasury noted that Japan had intervened in the foreign exchange market to stem the pace of the yen’s depreciation, its first such measure since 1998, and underlined its belief that such actions should be taken only rarely.
“The firm expectation of the Treasury is that in large, freely traded foreign exchange markets, intervention should be reserved only in very exceptional circumstances with appropriate prior consultation,” he said.
Reporting by Andrea Shalal; Editing by Paul Simao
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