SBV continues exchange rate flexibility to ease US currency concerns

The State Bank of Vietnam (SBV) pledges to continue fostering exchange rate flexibility while maintaining macroeconomic and financial market stability, so as to ease concerns from the US Department of Treasury about the country’s currency practices.

Together with its ongoing efforts to modernise monetary policy and exchange rate framework, the SBV is committed to further flexibly managing exchange rates in line with the state of development of the foreign-exchange market and economic factors to ensure the proper functioning of the market, thus promoting macroeconomic stability, according to the Vietnamese central bank.

It held that Vietnam’s exchange rate policy, within its general monetary policy framework, aims to stabilise the macro-economy and control inflation, not to create an unfair competitive advantage in international trade.

Vietnam had been under pressure from the US over its currency practices after the Trump administration, in December last year, declared Vietnam a currency manipulator.

In April, the US Department of Treasury removed the label of currency manipulator for Vietnam, saying it found insufficient evidence that Vietnam was manipulating its currency. The department and the SBV have maintained regular discussions at both high and technical levels on monetary policy, exchange rate and Vietnam’s forex market situation in the spirit of goodwill, cooperation and mutual respect.

The SBV’s statement was made following the virtual meeting between SBV Governor Nguyen Thi Hong and US Secretary of the Treasury Janet L. Yellen on July 19, during which they highly spoke of constructive coordination between the two sides.

They vowed to maintain close cooperation and goodwill to address shared challenges, such as supporting a strong and inclusive recovery from the COVID-19 pandemic.