The Trump administration has categorized Vietnam and Switzerland as currency manipulators which means the two countries are suspected of intentionally devaluing their currency against the U.S. dollar to gain unfair trade advantages, Reuters reported on Thursday.
In a long-overdue disclosure, the U.S. Treasury has also named Taiwan, Thailand and India to its list of nations it claims may be deliberately devaluing their currencies against the greenback. Foreign exchange analysts had broadly expected the U.S. government's action against these countries.
Others on the Trump administration's currency manipulator list include Malaysia, Singapore, Germany, Korea, Japan and Italy.
The designation comes as the global slowdown distorts the flow of trade, and deepens U.S. deficits with its trading partners. To be branded a currency manipulator, nations must have at least a 20- billion dollar trade excess with the U.S.
The U.S. Treasury removed the label from China in January this year after the two sides had attained trade deals that aimed to reduce China's ballooning trade surplus with the U.S.
The Swiss National Bank (SNB) said it doesn't manipulate its currency and remains "willing to intervene" more strongly in the foreign exchange market. Vietnam's trade ministry did not immediately respond to a request for comment.
According to Per Hammered, director of emerging markets strategies at SEB in Stockholm, the manipulator designation will increase pressure on U.S. President-elect Joe Biden before he takes over.
"The subtle implication of being included on the list is that you eventually could be sanctioned, and that adds pressure on countries not to weaken their currencies, or allow strengthening," Win Thin, global chief of Currency Strategy at BBH, said.
The U.S. Treasury report said that Switzerland and Vietnam were the only two nations that met all its criteria for being branded as a currency manipulator.
Currency experts expect Treasury Secretary Steven Mnuchin to release an official report in the next few days before he leaves office.