US says Switzerland no longer manipulates its currency

To earn the label of currency manipulator a country must have a minimum $20 billion bilateral trade surplus with the United States, foreign currency intervention exceeding 2% of Gross Domestic Product and a global current account surplus exceeding 2% of GDP. © Keystone / Ti-press / Alessandro Crinari

The United States government confirmed on Friday that Switzerland is no longer considered a currency manipulator, Swiss public broadcaster RTS reported 

As in April, the US Treasury Department determined there was “insufficient evidence” to designate Switzerland a currency manipulator, even thought it met two of three thresholds for that label.

Washington, however, will continue to monitor foreign exchange market interventions by the Swiss National Bank (SNB).

In a separate statement also issued on Friday, the SNB said it would remain in contact with US authorities.

Switzerland’s Federal Department of Finance  said “Switzerland does not manipulate the franc”. The SNB’s interventions in the foreign exchange market “are necessary for Swiss monetary policy, to ensure appropriate monetary conditions and thus guarantee price stability”, a FDF spokeswoman stressed in remarks quoted by RTS.

Apart from Switzerland, the US Treasury announced that it would continue to closely monitor China’s economic policies and Beijing’s measures to influence the exchange rate of its currency, as well as the exchange rate policies of Vietnam and Taiwan.

SNB in the crosshairs since late 2020

Washington has not accused any country of manipulating its currency in its semi-annual report to Congress. The report focuses on countries with large trade surpluses that intervene in the foreign exchange market to prevent their currencies from appreciating, making their exports more competitive.

Switzerland came under scrutiny in December 2020, when the US Treasury accused the country of manipulating its currency. In April, the US authorities backtracked, saying there was insufficient evidence of currency manipulation.

The Alpine nation’s foreign currency purchases and its large trade surplus with the United States met the US currency manipulation criteria, but its current account surplus fell just below the threshold required for the country to be labeled a manipulator.

A total of 12 countries are on the US list of countries that warrant close attention over their currency practices.