An agreement with the United States on Vietnam’s exchange rate management removes a potential bilateral irritant, returns the United States to a traditional view of foreign currencies and global trade, and sets Vietnam up for a return to export-driven high growth in 2021. On July 19, the State Bank of Vietnam (SBV) and the U.S. Treasury Department announced a joint agreement on exchange rate policy according to which Vietnam will not engage in competitive devaluations of its currency. In the long-term, by not imposing retaliatory tariffs on imports from Vietnam, the United States will make it easier for companies to begin to shift their supply chains away from China, while also giving Vietnam clarity on the external environment as Hanoi begins to plan economic development for the next five years.
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