The US and Vietnam announced of reaching an agreement on currency policy, months after former President Donald Trump’s administration had labelled Hanoi as a “currency manipulator”.

The announcement was made in a joint statement by US Treasury Secretary Janet Yellen and State Bank of Vietnam Governor Nguyen Thi Hong after their virtual meeting on Monday, reports Xinhua news agency.

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The statement said that the two sides have had “constructive discussions” in recent months through the enhanced engagement process, and reached agreement to address the Treasury’s concerns about Vietnam’s currency practices.

“I believe the State Bank of Vietnam’s attention to these issues over time not only will address Treasury’s concerns, but also will support the further development of Vietnam’s financial markets and enhance its macroeconomic and financial resilience,” said Yellen.

Hong, for her part, said the State Bank of Vietnam will continue to manage exchange rate policy within its general monetary policy framework to safeguard the proper functioning of the monetary and foreign exchange markets, to promote macroeconomic stability and to control inflation, not to create an unfair competitive advantage in international trade.

During the final days of the Trump’s administration, the Treasury had labelled Vietnam as a “currency manipulator” in its Semiannual Report on International Economic and Exchange Rate Policies to Congress in December 2020.

In January, the Office of the U.S Trade Representative (USTR) then claimed that Vietnam’s acts, policies and practices related to currency valuation are “unreasonable” and restrict American commerce, after releasing findings of the so-called Section 301 investigation into Hanoi’s currency practices, which was initiated in October 2020.

But the Treasury under the incumbent administration of President Joe Biden dropped the currency-manipulator designation in April.

In the joint statement, the State Bank of Vietnam reiterated that the focus of its monetary policy framework is to promote macroeconomic stability and to control inflation.

It also confirmed that it is bound under the Articles of Agreement of the International Monetary Fund (IMF) to avoid manipulating its exchange rate in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage and will refrain from any competitive devaluation of the Vietnamese dong.