Foreign exchange purchases - USA suspects Switzerland of currency manipulation

The USA is keeping a critical eye on Swiss currency policy and thus the SNB's foreign exchange purchases. According to the half-yearly report of the US Treasury Department on the monetary policy of the most important US trading partners to Congress, Switzerland, along with Vietnam and Taiwan, continues to meet all three criteria that the agency uses as an indicator of currency manipulation on the basis of the trade legislation of 2015.

However, under the 1988 Trade and Competition Legislation, there is insufficient evidence that the three countries influence their currencies to gain trade balance or competitiveness advantages, it said.

However, the ministry will stay in contact with Switzerland and Vietnam to better determine whether the interventions in the currency market create unfair conditions, the statement said.

SNB: Foreign exchange market intervention necessary

The SNB takes note that Switzerland is no longer referred to as a currency manipulator in the latest report, as stated in a statement. As in the past, the SNB again rejects the accusation of currency manipulation.

Foreign exchange market interventions are necessary to ensure appropriate monetary conditions and thus price stability, according to the SNB's point of view. The interventions would not aim to prevent adjustments in the balance of payments or to gain unjustified competitive advantages for the Swiss economy.

The International Monetary Fund (IMF) has continued to assess Switzerland's monetary and fiscal policy as appropriate, it is further emphasized. In particular, the IMF viewed foreign exchange market interventions as a legitimate instrument in view of the difficult macroeconomic environment in which the SNB operates.

Switzerland and the USA are important economic partners and the dialogue with the US Treasury will be continued, it is said. (Reuters / sda)