The Thai economy dodged a bullet last week, and not many people noticed. Newspaper headlines, when they appeared at all, noted the US government opted not to label China as a currency manipulator. The attention to China is understandable, given the existing and escalating "trade war" instigated by President Donald Trump. But most accounts of the biannual report of the US Treasury Department failed to note that the top target as a currency manipulator wasn't China, but Thailand.
As the Bloomberg agency noted after everyone let out their breath, "only one country" truly met the unique US definition of currency manipulation. Throughout his election campaign of 2016, Mr Trump repeatedly hammered home his claim that China fixes currency rates to boost its trade advantage. It is one clearly unkept campaign promise that he would name, shame and by implied extension punish Beijing. All of that rhetoric, combined with rules written long before Mr Trump appeared on the political scene, also exposed other countries.
It is vital to note that according to the US legal definition, a "currency manipulator" is a country that adjusts its exchange rates to gain a trade advantage. Of course, these days it's impossible for any country to simply state an exchange rate and expect everyone including currency traders to accept it. International currency rates are set according to literally hundreds of decision points. But the point made by the US Treasury Department -- and its current conservative secretary Steven Mnuchin -- is that even tiny gains or losses in a country's exchange rate can affect hundreds of millions, even billions of dollars of profit and loss in trade surplus or deficit.
